Rule2022-00292
Coronavirus State and Local Fiscal Recovery Funds
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 27, 2022
Effective
April 1, 2022
Issuing agencies
Treasury Department
Abstract
The Secretary of the Treasury (Treasury) is adopting as final the interim final rule published on May 17, 2021, with amendments. This rule implements the Coronavirus State Fiscal Recovery Fund and the Coronavirus Local Fiscal Recovery Fund established under the American Rescue Plan Act.
Full Text
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[Federal Register Volume 87, Number 18 (Thursday, January 27, 2022)]
[Rules and Regulations]
[Pages 4338-4454]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-00292]
[[Page 4337]]
Vol. 87
Thursday,
No. 18
January 27, 2022
Part II
Department of the Treasury
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31 CFR Part 35
Coronavirus State and Local Fiscal Recovery Funds; Final Rule
Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 /
Rules and Regulations
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DEPARTMENT OF THE TREASURY
31 CFR Part 35
RIN 1505-AC77
Coronavirus State and Local Fiscal Recovery Funds
AGENCY: Department of the Treasury.
ACTION: Final rule.
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SUMMARY: The Secretary of the Treasury (Treasury) is adopting as final
the interim final rule published on May 17, 2021, with amendments. This
rule implements the Coronavirus State Fiscal Recovery Fund and the
Coronavirus Local Fiscal Recovery Fund established under the American
Rescue Plan Act.
DATES: The provisions in this final rule are effective April 1, 2022.
FOR FURTHER INFORMATION CONTACT: Katharine Richards, Director,
Coronavirus State and Local Fiscal Recovery Funds, Office of Recovery
Programs, Department of the Treasury, (844) 529-9527.
SUPPLEMENTARY INFORMATION:
I. Introduction
Overview
Since the first case of coronavirus disease 2019 (COVID-19) was
discovered in the United States in January 2020, the pandemic has
caused severe, intertwined public health and economic crises. In March
2021, as these crises continued, the American Rescue Plan Act of 2021
(ARPA) \1\ established the Coronavirus State and Local Fiscal Recovery
Funds (SLFRF) to provide state, local, and Tribal governments \2\ with
the resources needed to respond to the pandemic and its economic
effects and to build a stronger, more equitable economy during the
recovery. The U.S. Department of the Treasury (Treasury) issued an
interim final rule implementing the SLFRF program on May 10, 2021 \3\
and has since disbursed over $240 billion to state, local, and Tribal
governments and received over 1,500 public comments on the interim
final rule. Treasury is now issuing this final rule which responds to
public comments, implements the ARPA statutory provisions on eligible
and ineligible uses of SLFRF funds, and makes several changes to the
provisions of the interim final rule, summarized below in the section
Executive Summary of Major Changes.
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\1\ Public Law 117-2. <a href="https://www.congress.gov/117/plaws/publ2/PLAW-117publ2.pdf">https://www.congress.gov/117/plaws/publ2/PLAW-117publ2.pdf</a>.
\2\ Throughout this Supplementary Information, Treasury uses
``state, local, and Tribal governments'' or ``recipients'' to refer
generally to governments receiving SLFRF funds; this includes
states, territories, Tribal governments, counties, metropolitan
cities, and nonentitlement units of local government.
\3\ 86 FR 26786 (May 17, 2021).
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Since Treasury issued the interim final rule in May 2021, both the
public health and economic situations facing the country have evolved.
On the public health front, the United States has made tremendous
progress in the fight against COVID-19, including a historic
vaccination campaign that has reached over 80 percent of adults with at
least one dose and is reaching millions of children as well.\4\
However, the disease continues to present an imminent threat to public
health, especially among unvaccinated individuals. As the Delta variant
spread across the country this summer and fall, the United States faced
another severe wave of cases, deaths, and strain on the healthcare
system, with the risk of hospitalization and mortality exponentially
greater to unvaccinated Americans. COVID-19 has now infected over 50
million and killed over 800,000 Americans since January 2020; tens of
thousands of Americans continue to be infected each day.\5\ Even as the
nation recovers, new and emerging COVID-19 variants may continue to
pose threats to both public health and the economy. Moving forward,
state, local, and Tribal governments will continue to play a major role
in responding through vaccination campaigns, testing, and other
services.
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\4\ Centers for Disease Control and Prevention, COVID Data
Tracker: COVID-19 Vaccinations in the United States, <a href="https://covid.cdc.gov/covid-data-tracker/#vaccinations">https://covid.cdc.gov/covid-data-tracker/#vaccinations</a> (last visited
December 31, 2021).
\5\ Centers for Disease Control and Prevention, COVID Data
Tracker, <a href="http://www.covid.cdc.gov/covid-data-tracker/#datatracker-home">http://www.covid.cdc.gov/covid-data-tracker/#datatracker-home</a> (last visited December 7, 2021).
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The economic recovery similarly has made tremendous progress but
faces continued risks from the disease and the disruptions it has
caused. In the early months of the pandemic, the United States
experienced the sharpest economic downturn on record, with unemployment
spiking to 14.8 percent in April 2020.\6\ The economy has gradually
added back jobs, with growth accelerating in the first half of 2021.\7\
However, as the Delta variant spread, the intensified health risks and
renewed disruptions slowed growth, demonstrating the continued risks
from the virus. By fall 2021, the economy had exceeded its pre-pandemic
size \8\ and unemployment had fallen below 5 percent,\9\ but despite
this progress, too many Americans remain unemployed, out of the labor
force, or unable to pay their bills, with this pain particularly acute
among lower-income Americans and communities of color. Again, moving
forward, state, local, and Tribal governments will remain on the
frontlines of the economic response and rebuilding a stronger economy
in the aftermath of the pandemic.
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\6\ U.S. Bureau of Labor Statistics, Unemployment Rate [UNRATE],
retrieved from FRED, Federal Reserve Bank of St. Louis; <a href="https://fred.stlouisfed.org/series/UNRATE">https://fred.stlouisfed.org/series/UNRATE</a> (last visited December 7, 2021).
\7\ Id.
\8\ U.S. Bureau of Economic Analysis, Real Gross Domestic
Product [GDPC1], retrieved from FRED, Federal Reserve Bank of St.
Louis, <a href="https://fred.stlouisfed.org/series/GDPC1">https://fred.stlouisfed.org/series/GDPC1</a> (last visited
December 7, 2021).
\9\ U.S. Bureau of Labor Statistics, supra note 6.
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However, as state, local, and Tribal governments continue to face
substantial needs to respond to public health and economic conditions,
they have also experienced severe impacts from the pandemic and
resulting recession. State, local, and Tribal governments cut over 1.5
million jobs in the early months of the pandemic amid sharp declines in
revenue and remain over 950,000 jobs below their pre-pandemic
levels.\10\ As the Great Recession demonstrated, austerity among state,
local, and Tribal governments can hamper overall economic growth and
severely curtail the ability of governments to serve their
constituents.
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\10\ U.S. Bureau of Labor Statistics, All Employees, State
Government [CES9092000001] and All Employees, Local Government
[CES9093000001], retrieved from FRED, Federal Reserve Bank of St.
Louis, <a href="https://fred.stlouisfed.org/series/CES9092000001">https://fred.stlouisfed.org/series/CES9092000001</a> and <a href="https://fred.stlouisfed.org/series/CES9093000001">https://fred.stlouisfed.org/series/CES9093000001</a> (last visited December 7,
2021).
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Recognizing these imperatives, the SLFRF program provides vital
resources for state, local, and Tribal governments to respond to the
pandemic and its economic effects and to replace revenue lost due to
the public health emergency, preventing cuts to government services.
Specifically, the ARPA provides that SLFRF funds \11\ may be used:
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\11\ The ARPA adds section 602 of the Social Security Act, which
creates the State Fiscal Recovery Fund, and section 603 of the
Social Security Act, which creates the Local Fiscal Recovery Fund
(together, SLFRF). Sections 602 and 603 contain substantially
similar eligible uses; the primary difference between the two
sections is that section 602 establishes a fund for states,
territories, and Tribal governments and section 603 establishes a
fund for metropolitan cities, nonentitlement units of local
government, and counties.
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(a) To respond to the public health emergency or its negative
economic impacts, including assistance to households, small businesses,
and nonprofits, or aid to impacted industries such as tourism, travel,
and hospitality;
(b) To respond to workers performing essential work during the
COVID-19
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public health emergency by providing premium pay to eligible workers;
(c) For the provision of government services to the extent of the
reduction in revenue due to the COVID-19 public health emergency
relative to revenues collected in the most recent full fiscal year
prior to the emergency; and
(d) To make necessary investments in water, sewer, or broadband
infrastructure.
In addition, Congress specified two types of ineligible uses of
funds: funds may not be used for deposit into any pension fund or, for
states and territories only, to directly or indirectly offset a
reduction in net tax revenue resulting from a change in law,
regulation, or administrative interpretation.
Issued May 10, 2021, Treasury's interim final rule provided further
detail on eligible uses of funds within the four statutory categories,
ineligible uses of funds, and administration of the program. The
interim final rule provided state, local, and Tribal governments
substantial flexibility to determine how best to use payments from the
SLFRF program to meet the needs of their communities. The interim final
rule aimed to facilitate swift and effective implementation by
establishing a framework for determining the types of programs and
services that are eligible under the ARPA along with examples of
eligible uses of funds that state, local, and Tribal governments may
consider.
State, local, and Tribal governments are already deploying SLFRF
funds to make an impact in their communities. The SLFRF program ensures
that state, local, and Tribal governments have the resources needed to
fight the pandemic, sustain and strengthen the economic recovery,
maintain vital public services, and make investments that support long-
term growth, opportunity, and equity. Treasury looks forward to
supporting and engaging with state, local, and Tribal governments as
they use these funds to make transformative investments in their
communities. Finally, with so many pressing and effective ways to use
SLFRF funds, there is no excuse for waste, fraud, or abuse of these
funds.
Treasury received over 1,500 comments spanning nearly all aspects
of the interim final rule. The final rule considers and responds to
comments, provides clarification to many aspects of the interim final
rule, and makes several changes to eligible uses under the program,
summarized immediately below.
Executive Summary of Major Changes and Clarifications
The final rule provides broader flexibility and greater simplicity
in the program, in response to public comments. Among other
clarifications and changes, the final rule provides for the following:
<bullet> Public Health and Negative Economic Impacts: In addition
to programs and services, the final rule clarifies that recipients may
use funds for capital expenditures that support an eligible COVID-19
public health or economic response. For example, recipients may build
certain affordable housing, childcare facilities, schools, hospitals,
and other projects consistent with the requirements in this final rule
and the Supplementary Information.
In addition, the final rule presumes that an expanded set of
households and communities are ``impacted'' or ``disproportionately
impacted'' by the pandemic, thereby allowing recipients to provide
responses to a broad set of households and entities without requiring
additional analysis. Further, the final rule provides a broader set of
enumerated eligible uses available for these communities as part of
COVID-19 public health and economic response, including making
affordable housing, childcare, and early learning services eligible in
all impacted communities and making certain community development and
neighborhood revitalization activities eligible for disproportionately
impacted communities.
Further, the final rule allows for a broader set of uses to restore
and support government employment, including hiring above a recipient's
pre-pandemic baseline, providing funds to employees that experienced
pay cuts or furloughs, avoiding layoffs, and providing retention
incentives.
<bullet> Premium Pay: The final rule offers more streamlined
options to provide premium pay, by broadening the share of essential
workers who can receive premium pay without a written justification
while maintaining a focus on lower-income and frontline essential
workers.
<bullet> Revenue Loss: The final rule offers a standard allowance
for revenue loss of up to $10 million, not to exceed a recipient's
SLFRF award amount, allowing recipients to select between a standard
amount of revenue loss or complete a full revenue loss calculation.
Recipients that select the standard allowance may use that amount for
government services.
<bullet> Water, Sewer, and Broadband Infrastructure: The final rule
significantly broadens eligible broadband infrastructure investments to
address challenges with broadband access, affordability, and
reliability, and adds additional eligible water and sewer
infrastructure investments, including a broad range of lead remediation
and stormwater management projects.
Structure of the Supplementary Information
In addition to this Introduction, this Supplementary Information is
organized into four sections: (1) Eligible Uses, (2) Restrictions on
Use, (3) Program Administration Provisions, and (4) Regulatory
Analyses.
The Eligible Uses section describes the standards to determine
eligible uses of funds in each of the four eligible use categories:
(1) Responding to the public health and negative economic impacts
of the pandemic (which includes several sub-categories)
(2) Providing premium pay to essential workers
(3) Providing government services to the extent of revenue loss due
to the pandemic, and
(4) Making necessary investments in water, sewer, and broadband
infrastructure.
Each eligible use category has separate and distinct standards for
assessing whether a use of funds is eligible. Standards, restrictions,
or other provisions in one eligible use category do not apply to the
others. Therefore, recipients should first determine which eligible use
category a potential use of funds fits within, then assess whether the
potential use of funds meets the eligibility standard or criteria for
that category. In the case of uses to respond to the public health and
negative economic impacts of the pandemic, recipients should also
determine which sub-category the eligible use fits within (i.e., public
health, assistance to households, assistance to small businesses,
assistance to nonprofits, aid to impacted industries, or public sector
capacity and workforce), then assess whether the potential use of funds
meets the eligibility standard for that sub-category. Treasury does not
pre-approve uses of funds; recipients are advised to review the final
rule and may pursue eligible projects under it.
In some sections of the rule, Treasury identifies specific uses of
funds that are eligible, called ``enumerated eligible uses''; for
example, Treasury provides many enumerated eligible uses of funds to
respond to the public health and negative economic impacts of the
pandemic. Uses of funds that are not specifically named as eligible in
this
[[Page 4340]]
final rule may still be eligible in two ways. First, under the revenue
loss eligible use category, recipients have broad latitude to use funds
for government services up to their amount of revenue loss due to the
pandemic. A potential use of funds that does not fit within the other
three eligible use categories may be permissible as a government
service, which recipients can fund up to their amount of revenue loss.
For example, transportation infrastructure projects are generally
ineligible as a response to the public health and negative economic
impacts of the pandemic; however, a recipient could fund these projects
as a government service up to its amount of revenue loss, provided that
other restrictions on use do not apply. See sections Revenue Loss and
Restrictions on Use for further information. Second, the eligible use
category for responding to the public health and negative economic
impacts of the pandemic provides a non-exhaustive list of enumerated
eligible uses, which means that the listed eligible uses include some,
but not all, of the uses of funds that could be eligible. The Eligible
Uses section provides a standard for determining if other uses of
funds, beyond those specifically enumerated, are eligible. If a
recipient would like to pursue a use of funds that is not specifically
enumerated, the recipient should use the standard and other guidance
provided in the section Public Health and Negative Economic Impacts to
assess whether the use of funds is eligible.
Next, the Restrictions on Use section describes limitations on how
funds may be used. Treasury has divided the Restriction on Use section
into (A) statutory restrictions under the ARPA, which include (1)
offsetting a reduction in net tax revenue, and (2) deposits into
pension funds, and (B) other restrictions on use, which include (1)
debt service and replenishing reserves, (2) settlements and judgments,
and (3) general restrictions. These restrictions apply to all eligible
use categories; however, some restrictions apply only to certain types
of recipient governments, and recipients are advised to review the
final rule to determine which restrictions apply to their type of
government (e.g., state, territory, Tribal government, county,
metropolitan city, or nonentitlement unit of government). To reiterate,
for recipient governments covered by a specific restriction, that
restriction applies to all eligible use categories and any use of funds
under the SLFRF program. Specifically:
<bullet> For states and territories only, funds may not be used to
offset directly or indirectly a reduction in net tax revenue resulting
from a change in state or territory law.
<bullet> For all recipients except Tribal governments, funds may
not be used for deposits into a pension fund.
<bullet> For all recipients, funds may not be used for debt service
or replenishing financial reserves.
<bullet> All recipients must also comply with three general
restrictions. First, a recipient may not use SLFRF funds for a program,
service, or capital expenditure that conflicts with or contravenes the
statutory purpose of ARPA, including a program, service, or capital
expenditure that includes a term or condition that undermines efforts
to stop the spread of COVID-19. Second, recipients may not use SLFRF
funds in violation of the conflict-of-interest requirements contained
in the Award Terms and Conditions, including any self-dealing or
violation of ethics rules. Lastly, recipients should be aware that
federal, state, and local laws and regulations, outside of SLFRF
program requirements, also apply, including for example, environmental
laws and federal civil rights and nondiscrimination requirements, which
include prohibitions on discrimination on the basis of race, color,
national origin, sex (including sexual orientation and gender
identity), religion, disability, age, or familial status (having
children under the age of 18).
The Program Administration Provisions section describes the
processes and requirements for administering the program on an ongoing
basis, specifically as relates to the following: Distribution of funds,
timeline for using funds, transfer of funds from a recipient to
different organizations, use of funds for program administration,
reporting on use of funds, and remediation and recoupment of funds used
for ineligible purposes. Of note, SLFRF funds may only be used for
costs incurred within a specific time period, beginning March 3, 2021,
with all funds obligated by December 31, 2024 and all funds spent by
December 31, 2026. Recipients are advised to also consult Treasury's
Reporting and Compliance Guidance for additional information on program
administration processes and requirements, including applicability of
the Uniform Guidance.
Finally, the section Regulatory Analyses provides Treasury's
analysis of the impacts of this rulemaking, as required by several
laws, regulations, and Executive Orders.
Throughout this Supplementary Information, statements using the
terms ``should'' or ``must'' refer to requirements, except when used in
summarizing opinions expressed in public comments. Statements using the
term ``encourage'' refer to recommendations, not requirements.
II. Eligible Uses
A. Public Health and Negative Economic Impacts
Background
Since the first case of COVID-19 was discovered in the United
States in January 2020, the disease has infected over 50 million and
killed over 800,000 Americans.\12\ The disease--and necessary measures
to respond--have had an immense public health and economic impact on
millions of Americans across many areas of life, as detailed below in
the respective sections on Public Health and Negative Economic Impacts.
Since the release of the interim final rule in May 2021, the country
has made major progress in fighting the disease and rebuilding the
economy but faces continued risks, as illustrated by the spread of the
Delta variant and the resulting slowdown in the economic recovery. The
SLFRF program, and Treasury's interim final rule, provide substantial
flexibility to recipients to respond to pandemic impacts in their local
community; this flexibility is designed to help state, local, and
Tribal governments adapt to the evolving public health emergency and
tailor their response as needs evolve and to the particular local needs
of their communities.
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\12\ Centers for Disease Control and Prevention, COVID Data
Tracker, <a href="http://www.covid.cdc.gov/covid-data-tracker/#datatracker-home">http://www.covid.cdc.gov/covid-data-tracker/#datatracker-home</a> (last visited December 31, 2021).
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Indeed, state, local, and Tribal governments face continued needs
to respond at scale to the public health emergency. This includes
continued public health efforts to slow the spread of the disease, to
increase vaccination rates and provide vaccinations to new populations
as they become eligible, to protect individuals living in congregate
facilities, and to address the broader impacts of the pandemic on
public health. Similarly, while a strong economic recovery is underway,
the economy remains 3.9 million jobs below its pre-pandemic level,
pointing to the continued need for response efforts, with low-income
workers and communities of color facing elevated rates of unemployment
and economic hardship.\13\ Long-standing disparities in health and
economic outcomes in
[[Page 4341]]
underserved \14\ communities, that amplified and exacerbated the
impacts of the pandemic, also present continued barriers to full and
equitable recovery.
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\13\ U.S. Bureau of Labor Statistics, All Employees, Total
Nonfarm [PAYEMS] <a href="https://fred.stlouisfed.org/series/PAYEMS">https://fred.stlouisfed.org/series/PAYEMS</a> (last
visited December 7, 2021).
\14\ Treasury uses ``underserved'' to refer to populations
sharing a particular characteristic, as well as geographic
communities, that have been systematically denied a full opportunity
to participate in aspects of economic, social, and civic life. In
the interim final rule, Treasury generally used the term
``disadvantaged'' to refer to these same populations and
communities.
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As state, local, and Tribal governments work to meet the public
health and economic needs of their communities, these governments are
also confronting the need to rebuild their own capacity. Facing severe
budget challenges during the pandemic, many state, local, and Tribal
governments have been forced to make cuts to services or their
workforces, including cutting over 1.5 million jobs from February to
May 2020, or delay critical investments. As of fall 2021, state, local,
and Tribal government employment remained over 950,000 jobs below pre-
pandemic levels.\15\ In the recovery from the Great Recession, cuts to
state, local, and Tribal governments became a meaningful drag on
economic growth for several years, and the SLFRF program provides the
resources needed to re-invest in vital public services and workers to
avoid this outcome.\16\
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\15\ U.S. Bureau of Labor Statistics, All Employees, State
Government [CES9092000001] and All Employees, Local Government
[CES9093000001], retrieved from FRED, Federal Reserve Bank of St.
Louis, <a href="https://fred.stlouisfed.org/series/CES9092000001">https://fred.stlouisfed.org/series/CES9092000001</a> and <a href="https://fred.stlouisfed.org/series/CES9093000001">https://fred.stlouisfed.org/series/CES9093000001</a> (last visited December 7,
2021).
\16\ Tracy Gordon, State and Local Budgets and the Great
Recession, Brookings Institution (Dec. 31, 2012), <a href="http://www.brookings.edu/articles/state-and-local-budgets-and-the-great-recession">http://www.brookings.edu/articles/state-and-local-budgets-and-the-great-recession</a>.
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1. General Provisions: Structure and Standards
Background: Sections 602(c)(1)(A) and 603(c)(1)(A) of the Social
Security Act establish that recipients may use funds ``to respond to
the public health emergency with respect to COVID-19 or its negative
economic impacts, including assistance to households, small businesses,
and nonprofits, or aid to impacted industries such as tourism, travel,
and hospitality.'' The interim final rule established three categories
within this eligible use: (1) Public health responses for those
impacted by the pandemic, including the general public; (2) responses
to the negative economic impacts that were experienced by those
impacted as a result of the pandemic; and (3) additional services,
either as a public health response or a response to the negative
economic impacts of the pandemic, for disproportionately impacted
communities.
The interim final rule established the method to determine which
specific programs or services may be eligible to respond to the public
health emergency or to respond to the negative economic impacts of the
public health emergency within this framework. The interim final rule
included multiple enumerated uses that are eligible within each of
these categories when provided to eligible populations, including
populations that the interim final rule presumed to have been impacted
(in the case of public health responses and responses to negative
economic impacts) or disproportionately impacted (in the case of
disproportionately impacted communities). Finally, the interim final
rule also allowed recipients to designate additional individuals or
classes as impacted or disproportionately impacted. The standards for
each of these criteria under the interim final rule are discussed
below.
To assess whether a program or service would be eligible to respond
to the public health emergency or its negative economic impacts, the
interim final rule stated that, ``the recipient [is required] to,
first, identify a need or negative impact of the COVID-19 public health
emergency and, second, identify how the program, service, or other
intervention addresses the identified need or impact [. . . .]
[E]ligible uses under this category must be in response to the disease
itself or the harmful consequences of the economic disruptions
resulting from or exacerbated by the COVID-19 public health
emergency.'' The enumerated eligible uses were presumed to meet this
criterion.
With respect to uses not specifically enumerated in the interim
final rule as eligible public health responses, the interim final rule
stated that, ``[t]o assess whether additional uses would be eligible
under this category, recipients should identify an effect of COVID-19
on public health, including either or both of immediate effects or
effects that may manifest over months or years, and assess how the use
would respond to or address the identified need.''
With respect to uses not specifically enumerated in the interim
final rule as eligible responses to a negative economic impact of the
public health emergency, the interim final rule stated that
``[e]ligible uses that respond to the negative economic impacts of the
public health emergency must be designed to address an economic harm
resulting from or exacerbated by the public health emergency. In
considering whether a program or service would be eligible under this
category, the recipient should assess whether, and the extent to which,
there has been an economic harm, such as loss of earnings or revenue,
that resulted from the COVID-19 public health emergency and whether,
and the extent to which, the use would respond to or address this
harm.\17\ A recipient should first consider whether an economic harm
exists and whether this harm was caused or made worse by the COVID-19
public health emergency.'' The interim final rule went on to say that:
``In addition, the eligible use must `respond to' the identified
negative economic impact. Responses must be related and reasonably
proportional to the extent and type of harm experienced; uses that bear
no relation or are grossly disproportionate to the type or extent of
harm experienced would not be eligible uses.''
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\17\ In some cases, a use may be permissible under another
eligible use category even if it falls outside the scope of section
(c)(1)(A) of section 602 and 603 of the Social Security Act.
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Throughout this final rule, Treasury refers to households,
communities, small businesses, nonprofits, and industries that
experienced public health or negative economic impacts of the pandemic
as ``impacted.'' The first section in the interim final rule under this
eligible use category included public health responses for these
impacted classes. The second category in the interim final rule under
this eligible use category included responses to the negative economic
impacts that were experienced by these impacted classes as a result of
the pandemic.
The interim final rule further recognized that certain populations
have experienced disproportionate health or negative economic impacts
during the pandemic, as pre-existing disparities in these communities
amplified the impacts of the pandemic. For example, the interim final
rule recognized that the negative economic effects of the pandemic were
particularly pronounced among lower-income families, who were more
likely to experience income loss and more likely to have a job that
required in-person work. The interim final rule recognized the role of
pre-existing social vulnerabilities and disparities in driving the
disparate health and economic outcomes and presumed that programs
designed to address these health or economic disparities are responsive
to the public health or negative economic impacts of the COVID-19
public health emergency, when provided in disproportionately impacted
communities. In addition to identifying certain populations and
communities
[[Page 4342]]
presumed to be disproportionately impacted, it also empowered
recipients to identify other disproportionately impacted households,
populations, communities, or small businesses. The interim final rule
provided that, in identifying these disproportionately impacted
communities, recipients should be able to support their determination
that the pandemic resulted in disproportionate public health or
economic outcomes to the specific populations, households, or
geographic areas to be served.
Throughout this final rule, Treasury refers to those households,
communities, small businesses, and nonprofits that experienced
disproportionate public health or negative economic impacts of the
pandemic as ``disproportionately impacted.'' The third category in the
interim final rule under this eligible use included public health
responses and responses to the negative economic impacts for these
disproportionately impacted classes.
The interim final rule provided significant flexibility for
recipients to determine which households, populations, communities, or
small businesses have been impacted and/or disproportionately impacted
by the pandemic and to identify appropriate responses. The interim
final rule included several provisions to provide simple methods for
recipients to identify impacts and design programs to address those
impacts. First, the interim final rule allowed recipients to
demonstrate a negative economic impact on a population or class and
provide assistance to households or small businesses that fall within
that population or class. In such cases, the recipient need only
demonstrate that an individual household or business is within the
class that experienced a negative economic impact, rather than
requiring a recipient to demonstrate that each individual household or
small business experienced a negative economic impact, because the
impact was already identified for the class.
Second, in the interim final rule, Treasury presumed that certain
populations have been impacted or disproportionately impacted and are
thus eligible for services that respond to these impacts or
disproportionate impacts. Specifically, the interim final rule
permitted recipients to presume that households that experienced
unemployment, increased food or housing insecurity, or are low- or
moderate-income experienced a negative economic impact from the
pandemic. The interim final rule also permitted recipients to presume
that certain services provided in Qualified Census Tracts (QCTs), to
individuals living in QCTs, or by Tribal governments are responsive to
disproportionate impacts of the pandemic. In addition to the
populations presumed to be impacted or disproportionately impacted,
under the interim final rule, recipients could identify other impacted
households or classes, as described above, as well as other
populations, households, or geographic areas that are
disproportionately impacted by the pandemic.
Third, as mentioned previously, the interim final rule included a
non-exhaustive list of uses of funds that Treasury identified as
responsive to the impacts or disproportionate impacts of the pandemic.
Treasury refers to these as ``enumerated eligible uses.''
To summarize, the interim final rule identified certain populations
that are presumed to be impacted by the pandemic (and specific
enumerated uses of funds that are responsive to that impact) and
populations that are presumed to be disproportionately impacted by the
pandemic (and specific enumerated uses of funds that are responsive to
those disproportionate impacts). In addition, the interim final rule
provided standards for recipients to assess whether additional uses of
funds, beyond the enumerated eligible uses, are eligible for impacted
and disproportionately impacted populations and permitted recipients to
identify other households or classes that experienced impacts of the
pandemic or disproportionate impacts of the pandemic.
Rule Structure
Public Comment: Many commenters expressed concern regarding the
structure of the eligible uses, indicating they found the structure of
the public health and negative economic impacts section of the interim
final rule to be confusing or difficult to navigate. Other commenters
indicated that they understood the enumerated uses to be the only
eligible uses and/or the presumed eligible populations to be the only
eligible populations. Several commenters expressed frustration about
the number of eligible uses specifically enumerated in the interim
final rule, which they considered too few, and commenters proposed a
wide range of additional enumerated eligible uses (for further
discussion, see the section Public Health and section Negative Economic
Impacts). Commenters expressed concern with pursuing uses of funds not
explicitly enumerated in the eligible use section or uncertainty
regarding the broad flexibility provided under the interim final rule
to pursue additional programs that respond to the public health or
negative economic impacts of the pandemic or the process for doing so.
Treasury Response: Treasury recognizes that many commenters felt
the structure of the interim final rule could be clarified. These
comments are consistent with many of the questions that Treasury has
received from recipients, which requested clarification regarding the
category their desired response fits into. Treasury observes that these
comments and questions generally fall into four categories: (1) How to
identify the correct public health or negative economic impact category
for a particular response, (2) how to identify whether a particular use
is eligible, (3) how to identify an impacted or disproportionately
impacted class, and (4) whether an enumerated use can be provided to a
class other than those presumed impacted or disproportionately
impacted. In response to comments, Treasury is adjusting the structure
of the public health and negative economic impacts eligible use section
of the final rule to improve clarity and make it easier for recipients
to interpret and apply the final rule.
Specifically, Treasury is restructuring the rule to aid recipients
in determining whether a particular response is eligible and how the
particular response might be eligible under a particular category. This
restructuring reinforces the fundamental criteria that a use of funds
is eligible based on its responsiveness to a public health or negative
economic impact experienced by individuals, households, small
businesses, nonprofits, or impacted industries (together
``beneficiaries'').\18\ This restructuring is intended to make the rule
easier to navigate and to implement, including any criteria or
conditions on particular uses of funds.
---------------------------------------------------------------------------
\18\ Note that small businesses, nonprofits, and industries may
also function as subrecipients. For additional information on these
distinctions see section Distinguishing Subrecipients versus
Beneficiaries.
---------------------------------------------------------------------------
The reorganization of the public health and negative economic
impacts section of the final rule is also intended to clarify the
enumerated eligible uses described in the interim final rule. The
reorganization itself is not intended to change the scope of the
enumerated uses that were included in the interim final rule or that
were allowable under the interim final rule. In some cases, specific
enumerated uses are being altered, and those changes are discussed
[[Page 4343]]
as changes within the section on that enumerated use.
The final rule streamlines and aligns services and standards that
are generally applicable or are provided for public health purposes.
Under this approach, eligible uses to respond to the public health
emergency are organized based on the type of public health problem: (1)
COVID-19 mitigation and prevention, (2) medical expenses, (3)
behavioral health care, and (4) preventing and responding to violence.
Under this approach, eligible uses to respond to the negative economic
impacts of the public health emergency are organized based on the type
of beneficiary: (1) Assistance to households, (2) assistance to small
businesses, and (3) assistance to nonprofits, alongside a fourth
standalone eligibility category for aid to travel, tourism,
hospitality, and other impacted industries. The first three categories,
assistance to households, small businesses, and nonprofits, include
enumerated eligible uses for impacted and disproportionately impacted
beneficiaries. This change in structure is intended to provide a
framework that clearly identifies the intended beneficiaries of uses of
funds and provides clarity about what types of assistance are
``responsive to the pandemic or its negative economic impacts'' for
these beneficiaries.
a. Standards for Identifying a Public Health or Negative Economic
Impact
Standards: Designating a Public Health Impact
Public Comment: Many commenters expressed uncertainty about how to
determine whether a use of funds, beyond those specifically enumerated
as eligible, might be an eligible public health response. For example,
many commenters submitted questions asking whether specific uses of
funds would be eligible. Others described what they considered to be
impacts of the pandemic and argued that uses of funds to respond to
these issues should be eligible. Some commenters requested that
Treasury provide additional detail to guide their assessments of
eligible uses of funds. For example, a commenter requested more
clarification around exactly what and whose medical expenses can be
covered. These comments ranged in their specificity and covered the
full range of the enumerated eligible uses.
Treasury Response: Treasury is clarifying that when assessing
whether a program or service is an eligible use to respond to the
public health impacts of the COVID-19 public health emergency, the
Department will consider the two eligibility requirements discussed
below. These standards apply to all proposed public health uses.
First, there must be a negative public health impact or harm
experienced by an individual or a class. For ease of administration,
the interim final rule allowed, and the final rule maintains the
ability for, recipients to identify a public health impact on a
population or group of individuals, referred to as a ``class,'' and to
provide assistance to that class. In determining whether an individual
is eligible for a program designed to address a harm experienced by a
class, the recipient need only document that the individual is within
the class that experienced a public health impact, see section
Standards: Designating Other Impacted Classes. In the case of some
impacts, for example impacts of COVID-19 itself that are addressed by
providing prevention and mitigation services, such a class could
reasonably include the general public.
Second, the program, service, or other intervention must address or
respond to the identified impact or harm. The final rule maintains the
interim final rule requirement that eligible uses under this category
must be in response to the disease itself or other public health harms
that it caused.\19\
---------------------------------------------------------------------------
\19\ In designing an intervention to mitigate COVID-19, the
recipient should consider guidance from public health authorities,
particularly the Centers for Disease Control and Prevention (CDC),
in assessing appropriate COVID-19 mitigation and prevention
strategies (see Centers for Disease Control and Prevention, COVID-
19, <a href="https://www.cdc.gov/coronavirus/2019-ncov/index.html">https://www.cdc.gov/coronavirus/2019-ncov/index.html</a>). A program
or service that imposes conditions on participation in or acceptance
of the service that would undermine efforts to stop the spread of
COVID-19 or discourage compliance with practices in line with CDC
guidance for stopping the spread of COVID-19 is not a permissible
use of funds.
---------------------------------------------------------------------------
Responses must be reasonably designed to benefit the individual or
class that experienced the public health impact or harm. Uses of funds
should be assessed based on their responsiveness to their intended
beneficiaries and the ability of the response to address the impact or
harm experienced by those beneficiaries.
Responses must also be related and reasonably proportional to the
extent and type of public health impact or harm experienced. Uses that
bear no relation or are grossly disproportionate to the type or extent
of harm experienced would not be eligible uses. Reasonably proportional
refers to the scale of the response compared to the scale of the harm.
It also refers to the targeting of the response to beneficiaries
compared to the amount of harm they experienced. In evaluating whether
a use is reasonably proportional, recipients should consider relevant
factors about the harm identified and the response. For example,
recipients may consider the size of the population impacted and the
severity, type, and duration of the impact. Recipients may also
consider the efficacy, cost, cost-effectiveness, and time to delivery
of the response.
If a recipient intends to fund capital expenditures in response to
the public health impacts of the pandemic, recipients should refer to
the section Capital Expenditures for details about the eligibility of
capital expenditures.
Standards: Designating a Negative Economic Impact
Public Comment: Many commenters expressed uncertainty about how to
determine whether uses of funds, beyond those specifically enumerated
as eligible, might be eligible responses to negative economic impacts.
For example, many commenters submitted questions asking whether
specific uses of funds would be eligible. Others described what they
considered to be impacts of the pandemic and argued that uses of funds
to respond to these issues should be eligible. Some commenters
requested that Treasury provide additional detail to guide their
assessments of eligible uses of funds. These comments ranged in their
specificity and covered the full range of eligible uses to respond to
negative economic impacts. Several commenters asked for clarification
about what types of food assistance would be considered eligible.
Another commenter requested that the establishment of outdoor dining be
eligible. Many commenters inquired about homeless shelters as an
eligible use of SLFRF funds.
Commenters also expressed uncertainty about the ability to
establish classes, including geographic areas, that experienced a
negative economic impact or disagreed with the requirement that an
individual entity be impacted by the pandemic in order to receive
assistance. For example, a commenter argued that interventions should
not be limited to individuals or businesses that experienced an
economic impact and should instead be used broadly to support economic
growth. These commenters argued that an expenditure that supports a
more robust economy may help combat the pandemic's negative economic
impacts, and it can do so even if funding is provided to individuals or
entities that did not themselves experience a negative economic impact
during the pandemic.
Treasury Response: The final rule maintains the standard
articulated in
[[Page 4344]]
the interim final rule. For clarity, the final rule re-articulates that
when assessing whether a program or service is an eligible use to
respond to the negative economic impacts of the COVID-19 public health
emergency, Treasury will consider the two eligibility requirements
discussed below.
First, there must be a negative economic impact, or an economic
harm, experienced by an individual or a class. The recipient should
assess whether, and the extent to which, there has been an economic
harm, such as loss of earnings or revenue, that resulted from the
COVID-19 public health emergency. A recipient should first consider
whether an economic harm exists and then whether this harm was caused
or made worse by the COVID-19 public health emergency. This approach is
consistent with the text of the statute, which provides that funds in
this category must be used to ``respond to the public health emergency
with respect to . . . its negative economic impacts.''
While economic impacts may either be immediate or delayed,
individuals or classes that did not experience a negative economic
impact from the public health emergency would not be eligible
beneficiaries under this category. As noted above, the interim final
rule permitted recipients to presume that households that experienced
unemployment, increased food or housing insecurity, or are low- or
moderate-income experienced a negative economic impact from the
pandemic. For discussion of the final rule's approach to this
presumption, see section Populations Presumed Eligible.
The final rule also maintains several provisions included in the
interim final rule and subsequent guidance that are intended to ease
administration of identifying that the beneficiary experienced a
negative economic impact or harm. For example, the interim final rule
allowed, and the final rule maintains the ability for, recipients to
demonstrate a negative economic impact on a population or group,
referred to as a ``class,'' and to provide assistance to households,
small businesses, or nonprofits that fall within that class. In such
cases, the recipient need only demonstrate that the household, small
business, or nonprofit is within the class that experienced a negative
economic impact, see section Standards: Designating Other Impacted
Classes. This would allow, for example, an internet access assistance
program for all households with children to support those households'
ability to participate in healthcare, work, and educational activities
like extending learning opportunities, among other critical activities.
In that case, the recipient would only need to identify a negative
economic impact to the class of ``households with children'' and would
not need to document or otherwise demonstrate that each individual
household served experienced a negative economic impact.
Second, the response must be designed to address the identified
economic harm or impact resulting from or exacerbated by the public
health emergency. In selecting responses, the recipient must assess
whether, and the extent to which, the use would respond to or address
this harm or impact. This approach is consistent with the text of the
statute, which provides that funds may be used to ``respond to'' the
``negative economic impacts'' of the public health emergency
``including assistance to households, small businesses, and nonprofits,
or aid to impacted industries such as tourism, travel, and
hospitality.'' The list of potential responses (``assistance'' or
``aid'') suggests that responses should address the ``negative economic
impacts'' of particular types of beneficiaries (e.g., households or
small businesses).
Responses must be reasonably designed to benefit the individual or
class that experienced the negative economic impact or harm. Uses of
funds should be assessed based on their responsiveness to their
intended beneficiary and the ability of the response to address the
impact or harm experienced by that beneficiary.\20\
---------------------------------------------------------------------------
\20\ For example, expenses such as excessive compensation to
employees or expenses which have already been reimbursed through
another federal program, are not reasonably designed to address a
negative economic impact to a beneficiary.
---------------------------------------------------------------------------
Responses must also be related and reasonably proportional to the
extent and type of harm experienced; uses that bear no relation or are
grossly disproportionate to the type or extent of harm experienced
would not be eligible uses.\21\ Reasonably proportional refers to the
scale of the response compared to the scale of the harm. It also refers
to the targeting of the response to beneficiaries compared to the
amount of harm they experienced; for example, it may not be reasonably
proportional for a cash assistance program to provide assistance in a
very small amount to a group that experienced severe harm and in a much
larger amount to a group that experienced relatively little harm. In
evaluating whether a use is reasonably proportional, recipients should
consider relevant factors about the harm identified and the response.
For example, recipients may consider the size of the population
impacted and the severity, type, and duration of the impact. Recipients
may also consider the efficacy, cost, cost-effectiveness, and time to
delivery of the response.
---------------------------------------------------------------------------
\21\ For example, a program or service that imposes conditions
on participation in or acceptance of the service that would
undermine efforts to stop the spread of COVID-19 or discourage
compliance with practices in line with CDC guidance for stopping the
spread of COVID-19 is not a permissible use of funds.
---------------------------------------------------------------------------
Finally, recipients should be aware of the distinction between
beneficiaries of funds and subrecipients; a recipient may provide
services to beneficiaries through subrecipients that did not experience
a negative economic impact, see section Distinguishing Subrecipients
versus Beneficiaries. That is, a recipient may award SLFRF funds to an
entity that did not experience a negative economic impact in order to
implement a program or provide a service to beneficiaries on its
behalf. Such transfers, when implementing a public health or negative
economic impact response, should be responsive to and designed to
benefit individuals, households, small businesses, nonprofits, or
impacted industries that did experience a public health or negative
economic impact.
Determining the Appropriate Eligible Use Category
Public Comment: Some commenters expressed uncertainty about how to
analyze negative economic impacts to different entities (e.g.,
households, small businesses, nonprofits). For example, commenters
asked whether a nonprofit, which did not experience a negative economic
impact itself, could be granted funds to provide services to
individuals experiencing homelessness, who did experience negative
economic impacts. Other commenters proposed providing assistance to
support the expansion of small businesses, under the theory that this
would create more job opportunities for unemployed workers who
experienced negative economic impacts.
Treasury Response: In the final rule, Treasury is clarifying that
recipients should assess a potential use of funds based on which
beneficiary experienced the negative economic impact, in other words,
the households, small businesses, nonprofits, or impacted industries
that experienced the negative economic impact.
Treasury notes that recipients may award SLFRF funds to many
different types of organizations to carry out eligible uses of funds
and serve beneficiaries on behalf of a recipient.
[[Page 4345]]
When a recipient provides funds to another entity to carry out eligible
uses of funds and serve beneficiaries the entity becomes a subrecipient
(see section Distinguishing a Subrecipient versus a Beneficiary). For
example, a recipient may grant funds to a nonprofit organization to
provide food assistance (an eligible use) to low-income households (the
beneficiaries). Recipients only need to assess whether the
beneficiaries experienced a negative economic impact and whether the
eligible use responds to that impact, consistent with the two-part
framework described above; the organization carrying out the eligible
use does not need to have experienced a negative economic impact if it
is serving as the vehicle for reaching the beneficiaries. When making
determinations about how to implement a program, recipients should
consider whether that method of program implementation is an effective
and efficient method to implement the program and do so in accordance
with the Uniform Guidance provisions that govern procurements and sub-
granting of federal funds, as applicable.
As noted above, recipients should analyze eligible uses based on
the beneficiary of the assistance or the entity that experienced a
negative economic impact. Assistance to a small business or to an
impacted industry must respond to a negative economic impact
experienced by that small business or industry. Recipients may not
provide assistance to small businesses or impacted industries that did
not experience a negative economic impact, although recipients can
identify negative economic impacts for classes, rather than individual
businesses, and may also presume that small businesses in certain areas
experienced impacts; see section General Provisions: Structure and
Standards and section Assistance to Small Businesses for details.
Several examples illustrate the application of these concepts. For
example, a recipient could provide assistance to households via a
contract with a business to create subsidized jobs for the long-term
unemployed; in this case the business is a subrecipient and need not
have experienced a negative economic impact, but the recipient would
need to identify a specific connection between the assistance provided
and addressing the negative economic impact experienced by the
unemployed households. The recipient could, for instance, document the
subsidized jobs created under the contract and their reservation for
long-term unemployed individuals. Similarly, a recipient might provide
assistance to a small business that experienced a pandemic-related loss
of revenue. This small business is a beneficiary and may use those
funds in many ways, potentially including hiring or retaining staff.
However, general assistance to a business that did not experience a
negative economic impact under the theory that this assistance
generally grows the economy and therefore enhances opportunities for
unemployed workers would not be an eligible use, because such
assistance is not reasonably designed to impact the individuals or
classes that experienced a negative economic impact. In other words,
there is not a reasonable connection between the assistance provided
and an impact on the beneficiaries. Such an activity would be
attenuated from and thus not reasonably designed to benefit the
households that experienced the negative economic impact.
b. Populations Presumed Eligible
Presumed Eligibility: Impacted and Disproportionately Impacted
Households and Communities
Background: As noted above, the interim final rule allowed
recipients to presume that certain households were impacted or
disproportionately impacted by the pandemic and thus eligible for
responsive programs or services. Specifically, under the interim final
rule, recipients could presume that a household or population that
experienced unemployment, experienced increased food or housing
insecurity, or is low- or moderate-income experienced negative economic
impacts resulting from the pandemic, and recipients may provide
services that respond to these impacts.
The interim final rule also recognized that pre-existing health,
economic, and social disparities contributed to disproportionate
pandemic impacts in certain communities and allowed for a broader list
of enumerated eligible uses to respond to the pandemic in
disproportionately impacted communities. Under the interim final rule,
recipients were allowed to presume that families residing in QCTs or
receiving services provided by Tribal governments were
disproportionately impacted by the pandemic.
Definition of Low- and Moderate-Income
Public Comment: As noted earlier, many commenters sought a
definition for ``low- and moderate-income'' to provide recipients
greater clarity on which specific households could be presumed to be
impacted by the pandemic.
Treasury Response: The final rule maintains the presumptions
identified in the interim final rule and defines low- and moderate-
income for the purposes of determining which households and populations
recipients may presume to have been impacted. To simplify the
administration of this presumption, the final rule adopts a definition
of low- and moderate-income based on thresholds established and used in
other federal programs.
Definitions. The final rule defines a household as low income if it
has (i) income at or below 185 percent of the Federal Poverty
Guidelines (FPG) for the size of its household based on the most
recently published poverty guidelines by the Department of Health and
Human Services (HHS) or (ii) income at or below 40 percent of the Area
Median Income (AMI) for its county and size of household based on the
most recently published data by the Department of Housing and Urban
Development (HUD).\22\
---------------------------------------------------------------------------
\22\ AMI is also often referred to as median family income for
the area. Since AMI is synonymous with this term and used more
generally, the final rule refers to AMI.
---------------------------------------------------------------------------
The final rule defines a household as moderate income if it has (i)
income at or below 300 percent of the FPG for the size of its household
based on the most recently published poverty guidelines by HHS or (ii)
income at or below 65 percent of the AMI for its county and size of
household based on the most recently published data by HUD.\23\
---------------------------------------------------------------------------
\23\ For the six New England states of Connecticut, Maine,
Massachusetts, New Hampshire, Rhode Island, and Vermont, HUD
provides AMI for towns rather than counties. Recipients in these
states should use the AMI corresponding to their town when
determining thresholds for both low and moderate income.
---------------------------------------------------------------------------
Recipients may determine whether to measure income levels for
specific households or for a geographic area based on the type of
service to be provided. For example, recipients developing a program
that serves specific households (e.g., a subsidy for internet access, a
childcare program) may measure income at the household level.
Recipients providing a service that reaches a general geographic area
(e.g., a park) may measure median income of that area.
Further, recipients should generally use the income threshold for
the size of the household to be served (e.g., when providing childcare
to a household of five, recipients should reference the income
threshold for a household of five); however, recipients may use the
income threshold for a default household size of three if providing
[[Page 4346]]
services that reach a general geographic area or if doing so would
simplify administration of the program to be provided (e.g., when
developing a park, recipients should use the income threshold for a
household size of three and compare it to median income of the
geographic area to be served).
Note that recipients can also identify and serve other classes of
households that experienced negative economic impacts or
disproportionate impacts from the pandemic; recipients can identify
these classes based on their income levels, including above the levels
defined as low- and moderate-income in the final rule. For example, a
recipient may identify that households in their community with incomes
above the final rule threshold for low-income nevertheless experienced
disproportionate impacts from the pandemic and provide responsive
services. See section General Provisions: Standards for Identifying
Other Eligible Populations for details on applicable standards.
Applicable levels. For reference, the FPG is commonly referred to
as the federal poverty level (FPL) and is related to--although distinct
from--the U.S. Census Bureau's poverty threshold. The final rule uses
the FPG when referring specifically to the HHS guidelines, as these are
the quantitative metrics used for determining low- and moderate-income
households.
The FPG by household size for 2021 is included in the table below.
Recipients should refer to HHS Poverty Guidelines for this information,
which is updated annually and available on the HHS website.\24\ For
calculating the thresholds of 40 percent and 65 percent of AMI,
recipients should refer to the annual HUD Section 8 50 percent income
limits by county and household size published by HUD and available on
the HUD website; in particular, recipients should calculate the 40
percent threshold as 0.8 times the 50 percent income limit, and
recipients should calculate the 65 percent threshold as 1.3 times the
50 percent income limit.\25\ Finally, for median income of Census
Tracts and other geographic areas, recipients should refer to the most
recent American Community Survey 5-year estimates available through the
Census website.\26\
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\24\ U.S. Department of Health and Human Service, HHS Poverty
Guidelines for 2021, available at <a href="https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines">https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines</a>.
\25\ U.S. Department of Housing and Urban Development, FY 2021
Section 8 Income Limits, available at <a href="https://www.huduser.gov/portal/datasets/il/il21/Section8-FY21.xlsx">https://www.huduser.gov/portal/datasets/il/il21/Section8-FY21.xlsx</a>. Recipients may refer to
the list of counties (and New England towns) identified by state and
metropolitan area for identifying the appropriate area. U.S.
Department of Housing and Urban Development, FY 2021 List of
Counties (and New England Towns) Identified by State and
Metropolitan Area, available at <a href="https://www.huduser.gov/portal/datasets/il/il21/area-definitions-FY21.pdf">https://www.huduser.gov/portal/datasets/il/il21/area-definitions-FY21.pdf</a>.
\26\ The U.S. Census Bureau provides an interactive map: U.S.
Census Bureau, Median Household Income State Selection Map,
available at <a href="https://data.census.gov/cedsci/map?q=Median%20Household%20Income&g=0100000US%2404000%24001&tid=ACSST5Y2019.S1901&cid=S1901_C01_012E&vintage=2019">https://data.census.gov/cedsci/map?q=Median%20Household%20Income&g=0100000US%2404000%24001&tid=ACSST5Y2019.S1901&cid=S1901_C01_012E&vintage=2019</a>. The U.S. Census Bureau
also provides an interactive table: U.S. Census Bureau, Median
Household Income In The Past 12 Months (In 2019 Inflation-Adjusted
Dollars), available at <a href="https://data.census.gov/cedsci/table?q=b19013&tid=ACSDT5Y2019.B19013&hidePreview=true">https://data.census.gov/cedsci/table?q=b19013&tid=ACSDT5Y2019.B19013&hidePreview=true</a>.
2021 Federal Poverty Guidelines
----------------------------------------------------------------------------------------------------------------
48 contiguous
states and the
Household size District of Alaska Hawaii
Columbia
----------------------------------------------------------------------------------------------------------------
1............................................................... $12,880 $16,090 $14,820
2............................................................... 17,420 21,770 20,040
3............................................................... 21,960 27,450 25,260
4............................................................... 26,500 33,130 30,480
5............................................................... 31,040 38,810 35,700
6............................................................... 35,580 44,490 40.920
7............................................................... 40,120 50,170 46,140
8............................................................... 44,660 55,850 51,360
----------------------------------------------------------------------------------------------------------------
For families/households with more than 8 persons, add the following amounts for each additional person:
48 Contiguous States and the District of Columbia: $4,540.
Alaska: $5,680.
Hawaii: $5,220.
Source: ``HHS Poverty Guidelines for 2021,'' available at <a href="https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines">https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines</a>.
Rationale. In defining low income, the final rule uses both the FPG
and AMI to account for national trends and regional differences. The
metric of 185 percent of FPG aligns with some other programs; for
instance, under the National School Lunch Program, students with
household incomes under 185 percent of FPG qualify for free or reduced-
price lunch, and schools often use eligibility for free or reduced-
price lunch as an indicator of low-income status under Title 1-A of the
Elementary and Secondary Education Act. Eligibility for other programs,
such as the Federal Communications Commission's e-Rate program and the
Special Supplemental Nutrition Program for Women, Infants and Children
employ this metric as well. In addition, 185 percent of the FPG for a
family of four is $49,025, which is approximately the wage earnings for
a two-earner household in which both earners receive the median wage in
occupations, such as waiters and waitresses and hotel clerks, that were
heavily impacted by COVID-19.\27\ This measure is targeted toward those
at the bottom of the income distribution and thus helps to promote use
of SLFRF funds towards populations with the greatest needs. At the same
time, with approximately one-quarter of Americans below 185 percent of
the poverty threshold, this approach is broad enough to facilitate use
of SLFRF funds across many jurisdictions.\28\ Because regions have
different cost and income levels, this definition also allows for
upward adjustment based on AMI for those regions where 40 percent of
AMI exceeds 185 percent of FPG. The metric of 40 percent of AMI is
based on the midpoint of values often used to designate certain
categories of low-income households; specifically, it is the midpoint
of the 30 percent income limit and the 50 percent income limit
[[Page 4347]]
used in programs such as the Community Development Block Grant (CDBG)
Program.
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\27\ See U.S. Bureau of Labor Statistics, Occupational
Employment and Wage Estimates, <a href="https://www.bls.gov/oes/current/oes_nat.htm">https://www.bls.gov/oes/current/oes_nat.htm</a> (last visited December 7, 2021).
\28\ U.S. Census Bureau, Poverty Status by State, <a href="https://www.census.gov/data/tables/time-series/demo/income-poverty/cps-pov/pov-46.html">https://www.census.gov/data/tables/time-series/demo/income-poverty/cps-pov/pov-46.html</a> (last visited December 7, 2021).
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In defining moderate income, the final rule uses both the FPG and
AMI to account for national trends and regional differences. While
there are different definitions of moderate income, 300 percent of FPG
falls within the range commonly used by researchers.\29\ Analysis of
median wages among a sample of occupations likely impacted by the
pandemic also suggests that an income cutoff of 300 percent of FPG
would include many households with workers in such occupations.\30\
Moreover, the metric of 300 percent of FPG covers households that,
while above the poverty line, often lack economic security.\31\
Treasury determined the AMI threshold for moderate income by
maintaining the same ratio of FPG multiplier to AMI multiplier as in
the definition of low income. This anchors the threshold to the
existing definitions of moderate income from the literature while
taking into account geographical variation in income and expenses in
the same manner as the definition of low income.
---------------------------------------------------------------------------
\29\ For instance, Melissa Kearney et al. (2013) cap the
``struggling lower middle-income class'' at 250 percent of the
federal poverty level, while Isabel Sawhill and Edward Rodrigue
(2015) define the ``middle class'' as those with incomes of at least
300 percent of the poverty line. Melissa Kearney et al., ``A Dozen
Facts about America's Struggling Lower-Middle Class,'' The Hamilton
Project (December 2013), <a href="https://www.hamiltonproject.org/assets/legacy/files/downloads_and_links/THP_12LowIncomeFacts_Final.pdf">https://www.hamiltonproject.org/assets/legacy/files/downloads_and_links/THP_12LowIncomeFacts_Final.pdf</a>;
Isabel Sawhill and Edward Rodrigue, ``An Agenda for Reducing Poverty
and Improving Opportunity,'' Brookings Institution, <a href="https://www.brookings.edu/wp-content/uploads/2016/07/Sawhill_FINAL.pdf">https://www.brookings.edu/wp-content/uploads/2016/07/Sawhill_FINAL.pdf</a>.
\30\ Data on median annual wages from: U.S. Bureau of Labor and
Statistics, Occupational Employment and Wage Statistics, available
at <a href="https://www.bls.gov/oes/current/oes_nat.htm">https://www.bls.gov/oes/current/oes_nat.htm</a> (last visited
December 7, 2021).
\31\ For instance, households earning between 200 and 300
percent of the FPG have significantly higher rates of food and
housing insecurity than those earning above 300 percent of the FPG.
Table 1, Kyle J. Caswell and Stephen Zuckerman, Food Insecurity,
Housing Hardship, and Medical Care Utilization, Urban Institute
(June 2018), <a href="https://www.urban.org/sites/default/files/publication/98701/2001896_foodinsecurity_housinghardship_medicalcareutilization_finalized.pdf">https://www.urban.org/sites/default/files/publication/98701/2001896_foodinsecurity_housinghardship_medicalcareutilization_finalized.pdf</a>.
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Eligibility Presumptions
Public Comment: Many commenters believed that a broader range of
groups should be considered presumptively impacted and
disproportionately impacted, arguing that many households had been
affected by the pandemic and that broader presumed eligibility would
help recipients provide assistance quickly and effectively.
Treasury also received many comments on the presumption that
families living in QCTs or receiving services from Tribal governments
were disproportionately impacted by the pandemic. While many commenters
supported the interim final rule's recognition of disproportionate
impacts of the pandemic on low-income communities, many commenters
disagreed with treating QCTs as the only presumed eligible group of
disproportionately impacted households, apart from households served by
Tribal governments. While acknowledging a potential increase in
administrative burden, commenters recommended that Treasury presume
other households or geographic areas, in addition to QCTs, were
disproportionately impacted; suggestions included all low- and
moderate-income households, geographic areas designated as Opportunity
Zones, Difficult Development Areas (DDAs), areas with a certain amount
of Real Estate Advantage Program (REAP) recipients, or use of
eligibility criteria from the Community Reinvestment Act. One commenter
generally recommended that a clearer definition of ``disproportionately
impacted'' should be provided and that any definition should include
communities of color and people of limited means. Another recommended
specific eligibility for people that had recently interacted with the
criminal justice system. Many commenters representing Tribal
governments and groups recommended a presumption of eligibility for all
Tribal uses of funds, clarification that off reservation members
remained eligible, and broad flexibility on use of funds.
Additionally, commenters noted that some areas are technically
eligible to be QCTs but fall short because of the aggregate population
of eligible tracts. One commenter noted that these areas should be
considered the same as QCTs for the purpose of SLFRF funds. Some
commenters argued that rural counties typically have few QCTs despite
high levels of poverty and disruption caused by the COVID-19 pandemic.
Other rural commenters recommended that the designation be by county
rather than at a more granular level, arguing that the QCT designation
is biased towards urban areas and understates the harm done to rural
America. Many commenters representing Tribal governments supported the
presumption that services provided by Tribal governments respond to
disproportionate impacts.
Treasury Response
Summary: While households residing in QCTs or served by Tribal
governments were presumed to be disproportionately impacted, Treasury
emphasizes that under the interim final rule recipients could also
identify other households, populations, or geographic areas that were
disproportionately impacted by the pandemic and provide services to
respond.
The final rule maintains the presumptions identified in the interim
final rule, as well as recipients' ability to identify other impacted
or disproportionately impacted classes. The final rule also allows
recipients to presume that low-income households were
disproportionately impacted, and as discussed above, defines low- and
moderate-income. Finally, under the final rule recipients may also
presume that households residing in the U.S. territories or receiving
services from territorial governments were disproportionately impacted.
Households presumed to be impacted: Impacted households are those
that experienced a public health or negative economic impact from the
pandemic.
With regard to public health impacts, recipients may presume that
the general public experienced public health impacts from the pandemic
for the purposes of providing services for COVID-19 mitigation and
behavioral health. In other words, recipients may provide a wide range
of enumerated eligible uses in these categories to the general public
without further analysis. As discussed in the introduction, COVID-19 as
a disease has directly affected the health of tens of millions of
Americans, and efforts to prevent and mitigate the spread of the
disease are needed and in use across the country. Further, the stress
of the pandemic and resulting recession have affected nearly all
Americans. Accordingly, the final rule presumes that the general public
are impacted by and eligible for services to respond to COVID-19
mitigation and prevention needs, as well as behavioral health needs.
With regard to negative economic impacts, as with the interim final
rule, under the final rule recipients may presume that a household or
population that experienced unemployment, experienced increased food or
housing insecurity, or is low- or moderate-income experienced negative
economic impacts resulting from the pandemic. The final rule's
definition of low- and moderate-income, by providing standard metrics
based on widely available data, is intended to simplify administration
for recipients.
Households presumed to be disproportionately impacted:
Disproportionately impacted households are those that experienced a
[[Page 4348]]
disproportionate, or meaningfully more severe, impact from the
pandemic. As discussed in the interim final rule, pre-existing
disparities in health and economic outcomes magnified the impact of the
COVID-19 public health emergency on certain households and communities.
As with the interim final rule, under the final rule recipients may
presume that households residing in QCTs or receiving services provided
by Tribal governments were disproportionately impacted by the pandemic.
In addition, under the final rule recipients may presume that low-
income households were disproportionately impacted by the pandemic.
Finally, under the final rule recipients may also presume that
households residing in the U.S. territories or receiving services from
territorial governments were disproportionately impacted.
Treasury notes that households presumed to be disproportionately
impacted would also be presumptively impacted, as these households have
not only experienced pandemic impacts but have experienced
disproportionate pandemic impacts; as a result, these households are
presumptively eligible for responsive services for both impacted and
disproportionately impacted households.
Many different geographic, income-based, or poverty-based
presumptions could be used to designate disproportionately impacted
populations. The combination of permitting recipients to use QCTs, low-
income households, and services provided by Tribal or territorial
governments as presumptions balances these varying methods.
Specifically, QCTs are a commonly used designation of geographic areas
based on low incomes or high poverty rates of households in the
community; for recipients providing geographically targeted services,
QCTs may provide a simple metric with readily available maps for use.
However, Treasury recognizes that QCTs do not capture all underserved
populations, including for reasons noted by commenters. By allowing
recipients to also presume that low-income households were
disproportionately impacted, the final rule provides greater
flexibility to serve underserved households or communities. Data on
household incomes is also readily available at varying levels of
geographic granularity (e.g., Census Tracts, counties), again
permitting flexibility to adapt to local circumstances and needs.
Finally, Treasury notes that, as discussed further below, recipients
may also identify other households, populations, and communities
disproportionately impacted by the pandemic, in addition to those
presumed to be disproportionately impacted.
Additionally, Tribal and territorial governments may face both
disproportionate impacts of the pandemic and administrability
challenges with operationalizing the income-based standard; therefore,
Treasury has presumed that services provided by these governments
respond to disproportionate pandemic impacts. Given a lack of regularly
published data on household incomes in most territories,\32\ as well as
a lack of poverty guidelines developed for these jurisdictions,\33\ it
may be highly challenging to assess disproportionate impact in these
communities according to an income- or poverty-based standard.
Similarly, data on incomes in Tribal communities are not readily
available.\34\ Finally, as described in the sections on Public Health
and Negative Economic Impacts, Tribal communities have faced
particularly severe health and economic impacts of the pandemic.
Similarly, available research suggests that preexisting health and
economic disparities in the territories amplified the impact of the
pandemic on these communities.\35\
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\32\ For instance, the American Community Survey does not
include all territories. U.S. Census Bureau, Areas Published,
<a href="https://www.census.gov/programs-surveys/acs/geography-acs/areas-published.html">https://www.census.gov/programs-surveys/acs/geography-acs/areas-published.html</a> (last visited November 9, 2021).
\33\ U.S. Department of Health and Human Services, supra note
24.
\34\ For instance, data from the American Community Survey is
based on geographical location rather than Tribal membership. U.S.
Census Bureau, My Tribal Area, <a href="https://www.census.gov/Tribal/Tribal_glossary.php">https://www.census.gov/Tribal/Tribal_glossary.php</a>.
\35\ Lina Stoylar et. al., Challenges in the U.S. Territories:
COVID-19 and the Medicaid Financing Cliff, Kaiser Family Foundation
(May 18, 2021), <a href="https://www.kff.org/coronavirus-covid-19/issue-brief/challenges-in-the-u-s-territories-covid-19-and-the-medicaid-financing-cliff/">https://www.kff.org/coronavirus-covid-19/issue-brief/challenges-in-the-u-s-territories-covid-19-and-the-medicaid-financing-cliff/</a>.
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Categorical Eligibility
Public Comment: Several commenters suggested that the final rule
permit recipients to rely on a beneficiary's eligibility for other
federal benefits programs as an easily administrable proxy for
identifying a group or population that experienced a negative economic
impact as a result of the COVID-19 public health emergency (i.e.,
categorical eligibility). In other words, a recipient would determine
that individuals or households are eligible for an SLFRF-funded program
based on the individual or household's eligibility in another program,
typically another federal benefit program. Commenters noted that
categorical eligibility is a common policy in program administration
that can significantly ease administrative burden on both program
administrators and beneficiaries.
Treasury Response: Treasury agrees that allowing recipients to
identify impacted and disproportionately impacted beneficiaries based
on their eligibility for other programs with similar income tests would
ease administrative burden. To the extent that the other program's
eligibility criteria align with a population or class that experienced
a negative economic impact of the pandemic, this approach is also
consistent with the process allowed under the final rule for recipients
to determine that a class has experienced a negative economic impact,
and then document that an individual receiving services is a member of
the class. For these reasons, the final rule recognizes categorical
eligibility for the following programs and populations:
<bullet> Impacted households. Treasury will recognize a household
as impacted if it otherwise qualifies for any of the following
programs:
[cir] Children's Health Insurance Program (CHIP)
[cir] Childcare Subsidies through the Child Care and Development
Fund (CCDF) Program
[cir] Medicaid
[cir] National Housing Trust Fund (HTF), for affordable housing
programs only
[cir] Home Investment Partnerships Program (HOME), for affordable
housing programs only
<bullet> Disproportionately impacted households. Treasury will
recognize a household as disproportionately impacted if it otherwise
qualifies for any of the following programs:
[cir] Temporary Assistance for Needy Families (TANF)
[cir] Supplemental Nutrition Assistance Program (SNAP)
[cir] Free and Reduced-Price Lunch (NSLP) and/or School Breakfast
(SBP) programs
[cir] Medicare Part D Low-income Subsidies
[cir] Supplemental Security Income (SSI)
[cir] Head Start and/or Early Head Start
[cir] Special Supplemental Nutrition Program for Women, Infants,
and Children (WIC)
[cir] Section 8 Vouchers
[cir] Low-Income Home Energy Assistance Program (LIHEAP)
[cir] Pell Grants
[cir] For services to address educational disparities, Treasury
will recognize Title
[[Page 4349]]
I eligible schools \36\ as disproportionately impacted and responsive
services that support the school generally or support the whole school
as eligible
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\36\ Title I eligible schools means schools eligible to receive
services under section 1113 of Title I, Part A of the Elementary and
Secondary Education Act of 1965, as amended (20 U.S.C. 6313),
including schools served under section 1113(b)(1)(C) of that Act.
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c. Standards for Identifying Other Eligible Populations
Standards: Designating Other Impacted Classes
Public Comment: Treasury received multiple comments requesting
additional clarification about how classes of impacted individuals may
be designated, as well as questions asking whether recipients must
demonstrate a specific public health or negative economic impact to
each entity served (e.g., each household receiving assistance under a
program). There were several comments requesting that specific
geographic designations, like a county or Impact Zone, be eligible to
use as a determining boundary.
Treasury Response: The interim final rule allowed, and the final
rule maintains, the ability for recipients to demonstrate a public
health or negative economic impact on a class and to provide assistance
to beneficiaries that fall within that class. Consistent with the scope
of beneficiaries included in sections 602(c)(1)(A) and 603(c)(1)(A) of
the Social Security Act, Treasury is clarifying that a recipient may
identify such impacts for a class of households, small businesses, or
nonprofits. In such cases, the recipient need only demonstrate that the
household, small business, or nonprofit is within the relevant class.
For example, a recipient could determine that restaurants in the
downtown area had generally experienced a negative economic impact and
provide assistance to those small businesses to respond. When providing
this assistance, the recipient would only need to demonstrate that the
small businesses receiving assistance were restaurants in the downtown
area. The recipient would not need to demonstrate that each restaurant
served experienced its own negative economic impact.
In identifying an impacted class and responsive program, service,
or capital expenditure, recipients should consider the relationship
between the definition of the class and proposed response. Larger and
less-specific classes are less likely to have experienced similar harms
and thus the responses are less likely to be responsive to the harms
identified. That is, as the group of entities being served by a program
has a wider set of fact patterns, or the type of entities, their
circumstances, or their pandemic experiences differ more substantially,
it may be more difficult to determine that the class has actually
experienced the same or similar negative economic impact and that the
response is appropriately tailored to address that impact.
Standard: Designating Other Disproportionately Impacted Classes
Summary of Interim Final Rule: As noted above, the interim final
rule provided a broad set of enumerated eligible uses of funds in
disproportionately impacted communities, including to address pre-
existing disparities that contributed to more severe pandemic impacts
in these communities. The interim final rule presumed that these
services are eligible uses when provided in a QCT, to families and
individuals living in QCTs, or when these services are provided by
Tribal governments. Recipients may also provide these services to
``other populations, households, or geographic areas disproportionately
impacted by the pandemic'' and, in identifying these disproportionately
impacted communities, should be able to support their determination
that the pandemic resulted in disproportionate public health or
economic outcomes to the group identified.
Public Comment: A significant number of commenters expressed
uncertainty regarding the process for determining eligibility for
disproportionately impacted communities beyond QCTs. A commenter noted
that a clearer definition of ``disproportionately impacted'' should be
delineated and that any definition should include communities of color
and people of limited means. Some commenters suggested a template or
checklist to see if an area meets the standard for disproportionately
impacted communities outside of QCTs. Some commenters stated that QCT
and non-QCT beneficiaries should be treated the same.
Treasury Response: Under the interim final rule, presuming
eligibility for services in QCTs, for populations living in QCTs, and
for Tribal governments was intended to ease administrative burden,
providing a simple path for recipients to offer services in underserved
communities, and is not an exhaustive list of disproportionately
impacted communities. To further clarify, the final rule codifies the
interpretive framework discussed above, including presumptions of
groups disproportionately impacted, as well as the ability to identify
other disproportionately impacted populations, households, or
geographies (referred to here as disproportionately impacted classes).
As discussed in the interim final rule, in identifying other
disproportionately impacted classes, recipients should be able to
support their determination that the pandemic resulted in
disproportionate public health or economic outcomes to the specific
populations, households, or geographic areas to be served. For example,
the interim final rule considered data regarding the rate of COVID-19
infections and deaths in low-income and socially vulnerable
communities, noting that these communities have experienced the most
severe health impacts, compared to national averages. Similarly, the
interim final rule considered the high concentration of low-income
workers performing essential work, the reduced ability to socially
distance, and other pre-existing public health challenges, all of which
correlate with more severe COVID-19 outcomes. The interim final rule
also considered the disproportionate economic impacts of the pandemic,
citing, for example, the rate of job losses among low-income persons as
compared to the general population. The interim final rule then
identified QCTs, a common, readily accessible, and geographically
granular method of identifying communities with a large proportion of
low-income residents, as presumed to be disproportionately impacted by
the pandemic.
In other words, the interim final rule identified
disproportionately impacted populations by assessing the impacts of the
pandemic and finding that some populations experienced meaningfully
more severe impacts than the general public. Similarly, to identify
disproportionately impacted classes, recipients should compare the
impacts experienced by that class to the typical or average impacts of
the pandemic in their local area, state, or nationally.
Recipients may identify classes of households, communities, small
businesses, nonprofits, or populations that have experienced a
disproportionate impact based on academic research or government
research publications, through analysis of their own data, or through
analysis of other existing data sources. To augment their analysis, or
when quantitative data is not readily available, recipients may also
consider qualitative research and sources like resident interviews or
[[Page 4350]]
feedback from relevant state and local agencies, such as public health
departments or social services departments. In both cases, recipients
should consider the quality of the research, data, and applicability of
analysis to their determination.
In designing a program or service that responds to a
disproportionately impacted class, a recipient must first identify the
impact and then identify an appropriate response. To assess
disproportionate impact, recipients should rely on data or research
that measures the public health or negative economic impact. An
assessment of the effects of a response (e.g., survey data on levels of
resident support for various potential responses) is not a substitute
for an assessment of the impact experienced by a particular class. Data
about the appropriateness or desirability of a response may be used to
assess the reasonableness of a response, once an impact or
disproportionate impact has been identified but should not be the basis
for assessing impact.
2. Public Health
Background
On January 21, 2020, the Centers for Disease Control and Prevention
(CDC) identified the first case of novel coronavirus in the United
States.\37\ Since that time, and through present day, the United States
has faced numerous waves of the virus that have brought acute strain on
health care and public health systems. At various points in the
pandemic, hospitals and emergency medical services have seen
significant influxes of patients; response personnel have faced
shortages of personal protective equipment; testing for the virus has
been scarce; and congregate living facilities like nursing homes have
seen rapid spread.
---------------------------------------------------------------------------
\37\ Press Release, Centers for Disease Control and Prevention,
First Travel-related Case of 2019 Novel Coronavirus Detected in
United States (Jan. 21, 2020), <a href="https://www.cdc.gov/media/releases/2020/p0121-novel-coronavirus-travel-case.html">https://www.cdc.gov/media/releases/2020/p0121-novel-coronavirus-travel-case.html</a>.
---------------------------------------------------------------------------
Since the initial wave of the COVID-19 pandemic, the United States
has faced several additional major waves that continued to impact
communities and stretch public health services. The summer 2020 wave
impacted communities in the south and southwest. As the weather turned
colder and people spent more time indoors, a wave throughout fall and
winter 2020 impacted communities in almost every region of the country
as the virus reached a point of uncontrolled spread and over 3,000
people died per day due to COVID-19.\38\
---------------------------------------------------------------------------
\38\ Centers for Disease Control and Prevention, COVID Data
Tracker: Trends in Number of COVID-19 Cases and Deaths in the US
Reported to CDC, by State/Territory, <a href="https://covid.cdc.gov/covid-data-tracker/#trends_dailytrendscases">https://covid.cdc.gov/covid-data-tracker/#trends_dailytrendscases</a> (last visited December 7,
2021).
---------------------------------------------------------------------------
In December 2020, the Food and Drug Administration (FDA) authorized
COVID-19 vaccines for emergency use, and soon thereafter, mass
vaccination in the United States began. At the time of the interim
final rule publication in May 2021, the number of daily new infections
was steeply declining as rapid vaccination campaigns progressed across
the country. By summer 2021, COVID-19 cases had fallen to their lowest
level since early months of the pandemic, when testing was scarce.
However, throughout late summer and early fall, the Delta variant, a
more infectious and transmittable variant of the SARS-CoV-2 virus,
sparked yet another surge. From June to early September, the seven-day
moving average of reported cases rose from 12,000 to 165,000.\39\
---------------------------------------------------------------------------
\39\ Id.
---------------------------------------------------------------------------
As of December 2021, COVID-19 in total has infected over 50 million
and killed over 800,000 Americans.\40\ Preventing and mitigating the
spread of COVID-19 continues to require a major public health response
from federal, state, local, and Tribal governments.
---------------------------------------------------------------------------
\40\ Centers for Disease Control and Prevention, COVID Data
Tracker, <a href="http://www.covid.cdc.gov/covid-data-tracker/#datatracker-home">http://www.covid.cdc.gov/covid-data-tracker/#datatracker-home</a> (last visited December 31, 2021).
---------------------------------------------------------------------------
First, state, local, and Tribal governments across the country have
mobilized to support the national vaccination campaign. As of December
2021, more than 80 percent of adults have received at least one dose,
with more than 470 million total doses administered.\41\ Additionally,
more than 15 million children over the age of 12 have received at least
one dose of the vaccine and over 47 million people have received a
booster dose.\42\ Vaccines for younger children, ages 5 through 11,
have been approved and are reaching communities and families across the
country. As new variants continue to emerge globally, the national
effort to administer vaccinations and other COVID-19 mitigation
strategies will be a critical component of the public health response.
---------------------------------------------------------------------------
\41\ Centers for Disease Control and Prevention, COVID Data
Tracker: COVID-19 Vaccinations in the United States, <a href="https://covid.cdc.gov/covid-data-tracker/#vaccinations">https://covid.cdc.gov/covid-data-tracker/#vaccinations</a> (last visited
December 7, 2021).
\42\ Id.
---------------------------------------------------------------------------
In early reporting on uses of SLFRF funds, recipients have
indicated that they plan to put funds to immediate use to support
continued vaccination campaigns. For example, one recipient has
indicated that it plans to use SLFRF funds to support a vaccine
incentive program, providing $100 gift cards to residents at community
vaccination clinics. The program aimed to target communities with high
public health needs.\43\ Another recipient reported that it is
partnering with multiple agencies, organizations, and providers to
distribute COVID-19 vaccinations to homebound residents in assisted
living facilities.\44\
---------------------------------------------------------------------------
\43\ Columbus, Ohio Recovery Plan, <a href="https://www.columbus.gov/recovery/">https://www.columbus.gov/recovery/</a>.
\44\ Luzerne County, Pennsylvania Recovery Plan, <a href="https://www.luzernecounty.org/DocumentCenter/View/26304/Final-Interim-Recovery-Plan-Performance-Report-83121">https://www.luzernecounty.org/DocumentCenter/View/26304/Final-Interim-Recovery-Plan-Performance-Report-83121</a>.
---------------------------------------------------------------------------
State, local, and Tribal governments have also continued to execute
other aspects of a wide-ranging public health response, including
increasing access to COVID-19 testing and rapid at-home tests, contact
tracing, support for individuals in isolation or quarantine,
enforcement of public health orders, new public communication efforts,
public health surveillance (e.g., monitoring case trends and genomic
sequencing for variants), enhancement to health care capacity through
alternative care facilities, and enhancement of public health data
systems to meet new demands or scaling needs.
State, local, and Tribal governments have also supported major
efforts to prevent COVID-19 spread through safety measures at key
settings like nursing homes, schools, congregate living settings, dense
worksites, incarceration settings, and in other public facilities. This
has included, for example, implementing infection prevention measures
or making ventilation improvements.
In particular, state, local, and Tribal governments have mounted
significant efforts to safely reopen schools. A key factor in school
reopening is the ability to implement COVID-19 mitigation strategies
such as providing masks and other hygiene resources, improving air-
quality and ventilation, increasing outdoor learning and eating spaces,
testing and contact tracing protocols, and a number of other
measures.\45\ For example, one recipient described plans to use SLFRF
funds to further invest in school health resources that were critical
components of school reopening and reducing the spread of COVID-19 in
schools. Those investments include the increasing school nurses and
social
[[Page 4351]]
workers, improved ventilation systems, and other health and safety
measures.
---------------------------------------------------------------------------
\45\ This includes implementing mitigation strategies consistent
with the Centers for Disease Control and Prevention's (CDC) Guidance
for COVID-19 Prevention in K-12 Schools (November 5, 2021),
available at <a href="https://www.cdc.gov/coronavirus/2019-ncov/community/schools-childcare/k-12-guidance.html">https://www.cdc.gov/coronavirus/2019-ncov/community/schools-childcare/k-12-guidance.html</a>.
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The need for public health measures to respond to COVID-19 will
continue moving forward. This includes the continuation of vaccination
campaigns for the general public, booster doses, and children. This
also includes monitoring the spread of COVID-19 variants, understanding
the impact of these variants, developing approaches to respond, and
monitoring global COVID-19 trends. Finally, the long-term health
impacts of COVID-19 will continue to require a public health response,
including medical services for individuals with ``long COVID,'' and
research to understand how COVID-19 impacts future health needs and
raises risks for the tens of millions of Americans who have been
infected.
The COVID-19 pandemic also negatively impacted other areas of
public health, particularly mental health and substance use. In January
2021, over 40 percent of American adults reported symptoms of
depression or anxiety, up from 11 percent in the first half of
2019.\46\ The mental health impacts of the pandemic have been
particularly acute for adults ages 18 to 24, racial and ethnic
minorities, caregivers for adults, and essential workers, with all
reporting significantly higher rates of considering suicide.\47\ The
proportion of children's emergency department visits related to mental
health has also risen noticeably.\48\ Similarly, rates of substance use
and overdose deaths have spiked: Preliminary data from the CDC show a
nearly 30 percent increase in drug overdose mortality from April 2020
to April 2021, bringing the estimated overdose death toll for a 12-
month period over 100,000 for the first time ever.\49\ The CDC also
found that 13 percent of adults started or increased substance use to
cope with stress related to COVID-19 and 26 percent reported having
symptoms of trauma- and stressor-related disorder (TRSD) related to the
pandemic.\50\
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\46\ Nirmita Panchal et al., The Implications of COVID-19 for
Mental Health and Substance Abuse (Feb. 10, 2021), https://
www.kff.org/coronaviruscovid-19/issue-brief/the-implications-of-
covid-19-for-mental-health-and-substance-use/
#:~:text=Older%20adults%20are%20also%20
more,prior%20to%20the%20current%20crisis; Mark [Eacute]. Czeisler et
al., Mental Health, Substance Abuse, and Suicidal Ideation During
COVID-19 Pandemic--United States, June 24-30 2020, Morb. Mortal.
Wkly. Rep. 69(32):1049-57 (Aug. 14, 2020), <a href="https://www.cdc.gov/mmwr/volumes/69/wr/mm6932a1.htm">https://www.cdc.gov/mmwr/volumes/69/wr/mm6932a1.htm</a>.
\47\ Id.
\48\ Rebecca T. Leeb et al., Mental Health-Related Emergency
Department Visits Among Children Aged <18 Years During the COVID
Pandemic--United States, January 1-October 17, 2020, Morb. Mortal.
Wkly. Rep. 69(45):1675-80 (Nov. 13, 2020), <a href="https://www.cdc.gov/mmwr/volumes/69/wr/mm6945a3.htm">https://www.cdc.gov/mmwr/volumes/69/wr/mm6945a3.htm</a>.
\49\ Centers for Disease Prevention and Control, National Center
for Health Statistics, Provisional Drug Overdose Death Counts,
<a href="https://www.cdc.gov/nchs/nvss/vsrr/drug-overdose-data.htm">https://www.cdc.gov/nchs/nvss/vsrr/drug-overdose-data.htm</a> (last
visited May 8 December 6, 2021).
\50\ Panchal, supra note 46; Mark [Eacute]. Czeisler et al.,
supra note 46.
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Another public health challenge exacerbated by the pandemic was
violent crime and gun violence, which increased during the pandemic and
has disproportionately impacted low-income communities.\51\ According
to the Federal Bureau of Investigation (FBI), although the property
crime rate fell 8 percent in 2020, the violent crime rate increased 6
percent in 2020 compared to 2019 data.\52\ In particular, the estimated
number of aggravated assault offenses rose 12 percent, while murder and
manslaughter increased 30 percent from 2019 to 2020.\53\ The proportion
of homicides committed with firearms rose from 73 percent in 2019 to 76
percent in 2020.\54\ Exposure to violence can create serious short-term
and long-term harmful effects to health and development, and repeated
exposure to violence may be connected to negative health outcomes.\55\
Addressing community violence as a public health issue may help prevent
and even reduce additional harm to individuals, households, and
communities.\56\
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\51\ The White House, FACT SHEET: More Details on the Biden-
Harris Administration's Investments in Community Violence
Interventions (April 7, 2021), <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/07/fact-sheet-more-details-on-the-biden-harris-administrations-investments-in-community-violence-interventions/">https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/07/fact-sheet-more-details-on-the-biden-harris-administrations-investments-in-community-violence-interventions/</a>.
\52\ Federal Bureau of Investigation, FBI Releases 2020 Crime
Statistics (September 27, 2021) <a href="https://www.fbi.gov/news/pressrel/press-releases/fbi-releases-2020-crime-statistics">https://www.fbi.gov/news/pressrel/press-releases/fbi-releases-2020-crime-statistics</a>.
\53\ Id.
\54\ Id.
\55\ The Educational Fund to Stop Gun Violence, Community Gun
Violence, <a href="https://efsgv.org/learn/type-of-gun-violence/community-gun-violence/">https://efsgv.org/learn/type-of-gun-violence/community-gun-violence/</a> (last visited November 9, 2021).
\56\ Giffords Law Center, Healing Communities in Crisis:
Lifesaving Solutions to the Urban Gun Violence Epidemic (March
2016), <a href="https://giffords.org/wp-content/uploads/2019/01/Healing-Communities-in-Crisis.pdf">https://giffords.org/wp-content/uploads/2019/01/Healing-Communities-in-Crisis.pdf</a>.
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Many communities are using SLFRF funds to invest in holistic
approaches in violence prevention that are rooted in targeted outreach
and addressing root causes. For example, the City of St. Louis is
planning to invest in expanding a ``community responder'' model
designed to provide clinical help and to divert non-violent calls away
from the police department. Additionally, the city will expand access
to mental health services, allowing residents to seek support at city
recreation centers, libraries, and other public spaces.\57\ Similarly,
Los Angeles County will further invest in its ``Care First, Jails
Last'' program which seeks to replace ``arrest and incarceration''
responses with health interventions.\58\
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\57\ St. Louis, MO Recovery Plan, <a href="https://www.stlouis-mo.gov/government/recovery/covid-19/arpa/plan/">https://www.stlouis-mo.gov/government/recovery/covid-19/arpa/plan/</a>.
\58\ Los Angeles County, CA Recovery Plan, <a href="http://file.lacounty.gov/SDSInter/bos/supdocs/160391.pdf">http://file.lacounty.gov/SDSInter/bos/supdocs/160391.pdf</a>.
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While the pandemic affected communities across the country, it
disproportionately impacted some demographic groups and exacerbated
health inequities along racial, ethnic, and socioeconomic lines.\59\
The CDC has found that racial and ethnic minorities are at increased
risk for infection, hospitalization, and death from COVID-19, with
Hispanic or Latino and Native American or Alaska Native patients at
highest risk.\60\
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\59\ Office of the White House, National Strategy for the COVID-
19 Response and Pandemic Preparedness (Jan. 21, 2021), <a href="https://www.whitehouse.gov/wp-content/uploads/2021/01/National-Strategy-for-the-COVID-19-Response-and-Pandemic-Preparedness.pdf">https://www.whitehouse.gov/wp-content/uploads/2021/01/National-Strategy-for-the-COVID-19-Response-and-Pandemic-Preparedness.pdf</a>.
\60\ In a study of 13 states from October to December 2020, the
CDC found that Hispanic or Latino and Native American or Alaska
Native individuals were 1.7 times more likely to visit an emergency
room for COVID-19 than White individuals, and Black individuals were
1.4 times more likely to do so than White individuals. See Sebastian
D. Romano et al., Trends in Racial and Ethnic Disparities in COVID-
19 Hospitalizations, by Region--United States, March-December 2020,
MMWR Morb Mortal Wkly Rep 2021, 70:560-565 (Apr. 16, 2021), <a href="https://www.cdc.gov/mmwr/volumes/70/wr/mm7015e2.htm?s_cid=mm7015e2_w">https://www.cdc.gov/mmwr/volumes/70/wr/mm7015e2.htm?s_cid=mm7015e2_w</a>.
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Similarly, low-income and socially vulnerable communities have seen
the most severe health impacts. For example, counties with high poverty
rates also have the highest rates of infections and deaths, with 308
deaths per 100,000 compared to the U.S. average of 238 deaths per
100,000, as of December 2021.\61\ Counties with high social
vulnerability, as measured by factors such as poverty and educational
attainment, have also fared more poorly than the national average, with
325 deaths per 100,000 as of December 2021.\62\ Over the course of the
[[Page 4352]]
pandemic, Native Americans have experienced more than one and a half
times the rate of COVID-19 infections, more than triple the rate of
hospitalizations, and more than double the death rate compared to White
Americans.\63\ Low-income and minority communities also exhibit higher
rates of pre-existing conditions that may contribute to an increased
risk of COVID-19 mortality.\64\ In addition, individuals living in low-
income communities may have had more limited ability to socially
distance or to self-isolate when ill, resulting in faster spread of the
virus, and were over-represented among essential workers, who face
greater risk of exposure.\65\
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\61\ Centers for Disease Control and Prevention, COVID Data
Tracker: Trends in COVID-19 Cases and Deaths in the United States,
by County-level Population Factors, <a href="https://covid.cdc.gov/covid-data-tracker/#pop-factors_totaldeaths">https://covid.cdc.gov/covid-data-tracker/#pop-factors_totaldeaths</a> (last visited December 7,
2021).
\62\ The CDC's Social Vulnerability Index includes fifteen
variables measuring social vulnerability, including unemployment,
poverty, education levels, single-parent households, disability
status, non-English speaking households, crowded housing, and
transportation access.
Centers for Disease Control and Prevention, COVID Data Tracker:
Trends in COVID-19 Cases and Deaths in the United States, by Social
Vulnerability Index, <a href="https://covid.cdc.gov/covid-data-tracker/#pop-factors_totaldeaths">https://covid.cdc.gov/covid-data-tracker/#pop-factors_totaldeaths</a> (last visited December 7, 2021).
\63\ Centers for Disease Control and Prevention, Risk for COVID-
19 Infection, Hospitalization, and Death By Race/Ethnicity, <a href="https://www.cdc.gov/coronavirus/2019-ncov/covid-data/investigations-discovery/hospitalization-death-by-race-ethnicity.html">https://www.cdc.gov/coronavirus/2019-ncov/covid-data/investigations-discovery/hospitalization-death-by-race-ethnicity.html</a> (last visited
December 7, 2021).
\64\ See, e.g., Centers for Disease Control and Prevention, Risk
of Severe Illness or Death from COVID-19 (Dec. 10, 2020), <a href="https://www.cdc.gov/coronavirus/2019-ncov/community/health-equity/racial-ethnic-disparities/disparities-illness.html">https://www.cdc.gov/coronavirus/2019-ncov/community/health-equity/racial-ethnic-disparities/disparities-illness.html</a> (last visited December
7, 2021).
\65\ Milena Almagro et al., Racial Disparities in Frontline
Workers and Housing Crowding During COVID-19: Evidence from
Geolocation Data (Sept. 22, 2020), NYU Stern School of Business
(forthcoming), available at <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3695249">https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3695249</a>; Grace McCormack et al., Economic
Vulnerability of Households with Essential Workers, JAMA 324(4):388-
90 (2020), available at <a href="https://jamanetwork.com/journals/jama/fullarticle/2767630">https://jamanetwork.com/journals/jama/fullarticle/2767630</a>.
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Social distancing measures in response to the pandemic may have
also exacerbated pre-existing public health challenges. For example,
for children living in homes with lead paint, spending substantially
more time at home raises the risk of developing elevated blood lead
levels, while screenings for elevated blood lead levels declined during
the pandemic.\66\ The combination of these underlying social and health
vulnerabilities may have contributed to more severe public health
outcomes of the pandemic within these communities, resulting in an
exacerbation of pre-existing disparities in health outcomes.\67\
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\66\ See, e.g., Joseph G. Courtney et al., Decreases in Young
Children Who Received Blood Lead Level Testing During COVID-19--34
Jurisdictions, January-May 2020, Morb. Mort. Wkly. Rep. 70(5):155-61
(Feb. 5, 2021), <a href="https://www.cdc.gov/mmwr/volumes/70/wr/mm7005a2.htm">https://www.cdc.gov/mmwr/volumes/70/wr/mm7005a2.htm</a>;
Emily A. Benfer & Lindsay F. Wiley, Health Justice Strategies to
Combat COVID-19: Protecting Vulnerable Communities During a
Pandemic, Health Affairs Blog (Mar. 19, 2020), <a href="https://www.healthaffairs.org/do/10.1377/hblog20200319.757883/full/">https://www.healthaffairs.org/do/10.1377/hblog20200319.757883/full/</a>.
\67\ See, e.g., Centers for Disease Control and Prevention,
supra note 62; Benfer & Wiley, supra note 66; Nathaniel M. Lewis et
al., Disparities in COVID-19 Incidence, Hospitalizations, and
Testing, by Area-Level Deprivation--Utah, March 3-July 9, 2020,
Morb. Mortal. Wkly. Rep. 69(38):1369-73 (Sept. 25, 2020), <a href="https://www.cdc.gov/mmwr/volumes/69/wr/mm6938a4.htm">https://www.cdc.gov/mmwr/volumes/69/wr/mm6938a4.htm</a>.
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Summary of the Interim Final Rule Approach to Public Health
Summary: As discussed above, the interim final rule provided
flexibility for recipients to pursue a wide range of eligible uses to
``respond to'' the COVID-19 public health emergency. Uses of funds to
``respond to'' the public health emergency address the SARS-CoV-2 virus
itself, support efforts to prevent or decrease spread of the virus, and
address other impacts of the pandemic on public health. The interim
final rule implemented these provisions by identifying a non-exhaustive
list of programs or services that may be funded as responding to COVID-
19 (``enumerated eligible uses''), along with considerations for
evaluating other potential uses of funds not explicitly listed.
Enumerated eligible uses are discussed below. For guidance on how to
determine whether a particular use is allowable, beyond those
enumerated, see section Standards: Identifying a Public Health Impact.
Enumerated eligible uses under this section built and expanded upon
permissible expenditures under the Coronavirus Relief Fund; for
clarity, the interim final rule expressly listed as eligible uses the
uses permissible under the Coronavirus Relief Fund, with minor
exceptions.\68\ The interim final rule also recognized that the nature
of the COVID-19 public health emergency, and responsive policy
measures, programs, and services, had changed over time and is expected
to continue evolving.
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\68\ Generally, funding uses eligible under CRF as a response to
the direct public health impacts of COVID-19 will continue to be
eligible under the ARPA, including those not explicitly listed in
the final rule, with the following two exceptions: (1) The standard
for eligibility of public health and safety payrolls has been
updated (see section Public Sector Capacity and Workforce in General
Provisions: Other) and (2) expenses related to the issuance of tax-
anticipation notes are no longer an eligible funding use (see
section Restrictions on Use: Debt Service).
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The interim final rule categorized enumerated eligible uses to
respond to the public health emergency into several categories: (1)
COVID-19 mitigation and prevention, (2) medical expenses, (3)
behavioral health care, (4) public health and safety staff, (5)
expenses to improve the design and execution of health and public
health programs, and (6) eligible uses to address disparities in public
health outcomes. For each category in turn, this section describes
public comments received and Treasury's responses, as well as comments
received proposing additional enumerated eligible uses.
Reorganizations and Cross-References: In some cases, enumerated
eligible uses included in the interim final rule under responding to
the public health emergency have been re-categorized in the
organization of the final rule to enhance clarity. For discussion of
eligible uses for public health and safety staff and to improve the
design and execution of public health programs, please see section
Public Sector Capacity and Workforce in General Provisions: Other. For
discussion of eligible uses to address disparities in public health
outcomes, please see section Assistance to Households in Negative
Economic Impacts.
Conversely, discussion of eligible assistance to small businesses
and nonprofits to respond to public health impacts has been moved from
Assistance to Small Businesses and Assistance to Nonprofits in Negative
Economic Impacts to this section. This change is consistent with the
interim final rule, which provides that appropriate responses to
address the public health impacts of COVID-19 may be provided to any
type of entity.
a. COVID-19 Mitigation and Prevention
COVID-19 public health response and mitigation tactics. Recognizing
the broad range of services and programming needed to contain COVID-19,
the interim final rule provided an extensive list of enumerated
eligible uses to prevent and mitigate COVID-19 and made clear that the
public health response to the virus is expected to continue to evolve
over time, necessitating different uses of funds.
Enumerated eligible uses of funds in this category included:
Vaccination programs; medical care; testing; contact tracing; support
for isolation or quarantine; supports for vulnerable populations to
access medical or public health services; public health surveillance
(e.g., monitoring case trends, genomic sequencing for variants);
enforcement of public health orders; public communication efforts;
enhancement to health care capacity, including through alternative care
facilities; purchases of personal protective equipment; support for
prevention, mitigation, or other services in congregate living
facilities (e.g., nursing homes, incarceration settings, homeless
shelters, group living facilities) and other key settings like schools;
ventilation improvements in congregate settings, health care settings,
or other key locations; enhancement of
[[Page 4353]]
public health data systems; other public health responses; and capital
investments in public facilities to meet pandemic operational needs,
such as physical plant improvements to public hospitals and health
clinics or adaptations to public buildings to implement COVID-19
mitigation tactics. These enumerated uses are consistent with guidance
from public health authorities, including the CDC.
Public Comment: Many commenters were supportive of expansive
enumerated eligible uses for mitigating and preventing COVID-19, noting
the wide range of activities that governments may undertake and the
continued changing landscape of pandemic response. Some commenters
requested that Treasury engage in ongoing consideration of and
consultation on evolving public health needs and resulting eligible
expenses. Some commenters noted that their jurisdiction does not have
an official public health program, for example smaller jurisdictions or
those that do not have a health department, and requested clarification
on whether their public health expenses would still be eligible in
compliance with program rules.
Treasury Response: In the final rule, Treasury is maintaining an
expansive list of enumerated eligible uses to mitigate and prevent
COVID-19, given the wide-ranging activities that governments may take
to further these goals, including ``other public health responses.''
Note that the final rule discusses several of these enumerated uses in
more detail below.
Treasury is further clarifying that when providing COVID-19
prevention and mitigation services, recipients can identify the
impacted population as the general public. Treasury presumes that all
enumerated eligible uses for programs and services, including COVID-19
mitigation and prevention programs and services, are reasonably
proportional responses to the harm identified unless a response is
grossly disproportionate to the type or extent of harm experienced.
Note that capital expenditures are not considered ``programs and
services'' and are not presumed to be reasonably proportional responses
to an identified harm except as provided in section Capital
Expenditures in General Provisions: Other. In other words, recipients
can provide any COVID-19 prevention or mitigation service to members of
the general public without any further analysis of impacts of the
pandemic on those individuals and whether the service is responsive.
This approach gives recipient governments an extensive set of
eligible uses that can adapt to local needs, as well as evolving
response needs and developments in understanding of transmission of
COVID-19. Treasury emphasizes how the enumerated eligible uses can
adapt to changing circumstances. For example, when the interim final
rule was released, national daily COVID-19 cases were at relatively low
levels and declining; \69\ as the Delta variant spread and cases peaked
in many areas of the country, particularly those with low vaccination
rates, government response needs and tactics evolved, and the SLFRF
funds provided the ability to quickly and nimbly adapt to new public
health needs. Treasury also notes that funds may be used to support
compliance with and implementation of COVID-19 safety requirements,
including vaccination requirements, testing programs, or other required
practices.
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\69\ See Centers for Disease Control and Prevention, COVID Data
Tracker, <a href="https://covid.cdc.gov/covid-data-tracker/#trends_dailycases">https://covid.cdc.gov/covid-data-tracker/#trends_dailycases</a>
(last visited December 7, 2021).
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Recipient governments do not need to have an official health or
public health program in order to utilize these eligible uses; any
recipient can pursue these eligible uses, though Treasury recommends
consulting with health and public health professionals to support
effective implementation.
The CDC has provided recommendations and guidelines to help
mitigate and prevent COVID-19. The interim final rule and final rule
help support recipients in stopping the spread of COVID-19 through
these recommendations and guidelines.\70\ The final rule reflects
changing circumstances of COVID-19 and provides a broad range of
permissible uses for mitigating and preventing the spread of the
disease, in a manner consistent with CDC guidelines and
recommendations.
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\70\ See Centers for Disease Control and Prevention, COVID-19,
<a href="https://www.cdc.gov/coronavirus/2019-ncov/index.html">https://www.cdc.gov/coronavirus/2019-ncov/index.html</a> (last visited
November 8, 2021).
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The purpose of the SLFRF funds is to mitigate the fiscal effects
stemming from the COVID-19 public health emergency, including by
supporting efforts to stop the spread of the virus. The interim final
rule and final rule implement this objective by, in part, providing
that recipients may use SLFRF funds for COVID-19 mitigation and
prevention.\71\ A program or service that imposes conditions on
participation in or acceptance of the service that would undermine
efforts to stop the spread of COVID-19 or discourage compliance with
recommendations and guidelines in CDC guidance for stopping the spread
of COVID-19 is not a permissible use of funds. In other words,
recipients may not use funds for a program that undermines practices
included in the CDC's guidelines and recommendations for stopping the
spread of COVID-19. This includes programs that impose a condition to
discourage compliance with practices in line with CDC guidance (e.g.,
paying off fines to businesses incurred for violation of COVID-19
vaccination or safety requirements), as well as programs that require
households, businesses, nonprofits, or other entities not to use
practices in line with CDC guidance as a condition of receiving funds
(e.g., requiring that businesses abstain from requiring mask use or
employee vaccination as a condition of receiving SLFRF funds).
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\71\ See Sec. 35.6(b); Coronavirus State and Local Fiscal
Recovery Funds, 86 FR at 26786.
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Vaccination programs and vaccine incentives. At the time of the
interim final rule release, many vaccination programs were using mass
vaccination tactics to rapidly reach Americans en masse for first
vaccine doses.\72\ Since that time, the FDA has authorized booster
vaccine doses for certain groups and certain vaccines and has also
authorized vaccines for youths \73\ \74\ The inclusion of ``vaccination
programs'' as an eligible use allows for adaptation as the needs of
programs change or new groups become eligible for different types of
vaccinations.
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\72\ Centers for Disease Control and Prevention, COVID Data
Tracker: COVID-19 Vaccinations in the United States, <a href="https://covid.cdc.gov/covid-data-tracker/#vaccinations">https://covid.cdc.gov/covid-data-tracker/#vaccinations</a> (last visited October
18, 2021).
\73\ U.S. Food and Drug Administration, Coronavirus (COVID-19)
Update: FDA Takes Additional Actions on the Use of a Booster Dose
for COVID-19 Vaccines, <a href="https://www.fda.gov/news-events/press-announcements/fda-authorizes-pfizer-biontech-covid-19-vaccine-emergency-use-children-5-through-11-years-age">https://www.fda.gov/news-events/press-announcements/fda-authorizes-pfizer-biontech-covid-19-vaccine-emergency-use-children-5-through-11-years-age</a> (last visited November
8, 2021).
\74\ U.S. Food and Drug Administration, FDA Authorizes Pfizer-
BioNTech COVID-19 Vaccine for Emergency Use in Children 5 through 11
Years of Age, <a href="https://www.fda.gov/news-events/press-announcements/fda-authorizes-pfizer-biontech-covid-19-vaccine-emergency-use-children-5-through-11-years-age">https://www.fda.gov/news-events/press-announcements/fda-authorizes-pfizer-biontech-covid-19-vaccine-emergency-use-children-5-through-11-years-age</a> (last visited November 8, 2021).
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Public Comment: Since the release of the interim final rule, many
recipient governments have also requested clarification on whether
vaccine incentives are a permissible use of funds.
Treasury Response: Treasury issued guidance clarifying that
``[vaccine] programs that provide incentives reasonably expected to
increase the number of people who choose to get vaccinated, or that
motivate people to get vaccinated sooner than they otherwise would
have, are an allowable
[[Page 4354]]
use of funds so long as such costs are reasonably proportional to the
expected public health benefit.'' \75\ This use of funds remains
permissible under the final rule.
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\75\ Coronavirus State and Local Fiscal Recovery Funds,
Frequently Asked Questions, as of July 19, 2021; <a href="https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf">https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf</a>. Note that programs
may provide incentives to individuals who have already received a
vaccination if the incentive is reasonably expected to increase the
number of people who choose to get vaccinated or motivate people to
get vaccinated sooner and the costs are reasonably proportional to
the expected public health benefit.
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Capital Expenditures
Public Comment: Many commenters requested clarification around the
types and scope of permissible capital investments in public facilities
to meet pandemic operational needs; ventilation improvements in
congregate settings, health care settings, or other key locations; and
whether support for prevention and mitigation in congregate facilities
could include facilities renovations, improvements, or construction of
new facilities, or if the facilities must solely be used for COVID-19
response.
Treasury Response: For clarity, Treasury has addressed the
eligibility standard for capital expenditures, or investments in
property, facilities, or equipment, in one section of this
Supplementary Information; see section Capital Expenditures in General
Provisions: Other. In recognition of the importance of capital
expenditures in the COVID-19 public health response, Treasury
enumerates that the following projects are examples of eligible capital
expenditures, as long as they meet the standards for capital
expenditures in section Capital Expenditures in General Provisions:
Other:
<bullet> Improvements or construction of COVID-19 testing sites and
laboratories, and acquisition of related equipment;
<bullet> Improvements or construction of COVID-19 vaccination
sites;
<bullet> Improvements or construction of medical facilities
generally dedicated to COVID-19 treatment and mitigation (e.g.,
emergency rooms, intensive care units, telemedicine capabilities for
COVID-19 related treatment);
<bullet> Expenses of establishing temporary medical facilities and
other measures to increase COVID-19 treatment capacity, including
related construction costs;
<bullet> Acquisition of equipment for COVID-19 prevention and
treatment, including ventilators, ambulances, and other medical or
emergency services equipment;
<bullet> Improvements to or construction of emergency operations
centers and acquisition of emergency response equipment (e.g.,
emergency response radio systems);
<bullet> Installation and improvements of ventilation systems;
<bullet> Costs of establishing public health data systems,
including technology infrastructure;
<bullet> Adaptations to congregate living facilities, including
skilled nursing facilities, other long-term care facilities,
incarceration settings, homeless shelters, residential foster care
facilities, residential behavioral health treatment, and other group
living facilities, as well as public facilities and schools (excluding
construction of new facilities for the purpose of mitigating spread of
COVID-19 in the facility); and
<bullet> Mitigation measures in small businesses, nonprofits, and
impacted industries (e.g., developing outdoor spaces).
Other clarifications on COVID-19 mitigation: Medical care, supports
for vulnerable populations, data systems, carceral settings. Based on
public comments and questions received from recipients following the
interim final rule, Treasury is making several further clarifications
on enumerated eligible uses in this category.
Public Comment: Several commenters requested clarification on
eligible uses of funds for medical care; Treasury addresses those
comments in the section Medical Expenses below.
Public Comment: Recipients posed questions on the type and scope of
activities eligible as ``supports for vulnerable populations to access
medical or public health services.''
Treasury Response: Enumerated eligible uses should be considered in
the context of the eligible use category or section where they appear;
in this case, ``supports for vulnerable populations to access medical
or public health services'' appears in the section COVID-19 Mitigation
and Prevention. As such, these eligible uses should help vulnerable or
high-risk populations access services that mitigate COVID-19, for
example, transportation assistance to reach vaccination sites, mobile
vaccination or testing programs, or on-site vaccination or testing
services for homebound individuals, those in group homes, or similar
settings.
Public Comment: Some commenters asked whether ``enhancement of
public health data systems'' could include investments in software,
databases, and other information technology resources that support
responses to the COVID-19 public health emergency but also provide
benefits for other use cases and long-term capacity of public health
departments and systems.
Treasury Response: These are permissible uses of funds under the
interim final rule and remain eligible under the final rule.
Assistance to Businesses and Nonprofits To Implement COVID-19
Mitigation Strategies
Background: As detailed above, Treasury received many public
comments describing uncertainty about which eligible use category
should be used to assess different potential uses of funds. As a
result, Treasury has re-categorized some uses of funds in the final
rule to provide greater clarity, consistent with the principle that
uses of funds should be assessed based on their intended beneficiary.
For example, COVID-19 mitigation and prevention serves the general
public or specific populations within the public. However, in the
interim final rule, assistance to small businesses, nonprofits, and
impacted industries to implement COVID-19 mitigation and prevention
strategies was categorized in the respective sections within Negative
Economic Impacts. The final rule consolidates all COVID-19 mitigation
and prevention within Public Health.
Public Comment: Treasury has received multiple comments and
questions about which eligible use permits the recipient to provide
assistance to businesses and nonprofits to address the public health
impacts of COVID-19.
Treasury Response: In the final rule, these services have been re-
categorized under COVID-19 mitigation and prevention to reflect the
fact that this assistance responds to public health impacts of the
pandemic rather than the negative economic impacts to a small business,
nonprofit, or impacted industry. When providing COVID-19 mitigation and
prevention services, recipients can identify the impacted entity as
small businesses, nonprofits, or businesses in impacted industries in
general. As with all enumerated eligible uses, recipients may presume
that all COVID-19 mitigation and prevention programs and services are
reasonably proportional responses to the harm identified unless a
response is grossly disproportionate to the type or extent of harm
experienced. Note that capital expenditures are not considered
``programs and services'' and are not presumed to be reasonably
proportional responses to an identified harm except as provided in
section Capital Expenditures in General Provisions: Other. In other
words, recipients can provide any COVID-19 prevention or mitigation
service to small businesses, nonprofits, and businesses in impacted
[[Page 4355]]
industries without any further analysis of impacts of the pandemic on
those entities and whether the service is responsive.
In some cases, this means that an entity not otherwise eligible to
receive assistance to respond to negative economic impacts of the
pandemic, for example an entity that did not experience a negative
economic impact, may still be eligible to receive assistance under this
category for COVID-19 mitigation and prevention services.
Uses of funds can include loans, grants, or in-kind assistance to
small businesses, nonprofits, or other entities to implement COVID-19
prevention or mitigation tactics, such as vaccination; testing; contact
tracing programs; physical plant changes to enable greater use of
outdoor spaces or ventilation improvements; enhanced cleaning efforts;
and barriers or partitions. For example, this would include assistance
to a restaurant to establish an outdoor patio, given evidence showing
much lower risk of COVID-19 transmission outdoors.\76\ Uses of funds
can also include aid to travel, tourism, hospitality, and other
impacted industries to implement COVID-19 mitigation and prevention
measures to enable safe reopening, for example, vaccination or testing
programs, improvements to ventilation, physical barriers or partitions,
signage to facilitate social distancing, provision of masks or personal
protective equipment, or consultation with infection prevention
professionals to develop safe reopening plans.
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\76\ See Centers for Disease Control and Prevention, Participate
in Outdoor and Indoor Activities, <a href="https://www.cdc.gov/coronavirus/2019-ncov/daily-life-coping/outdoor-activities.html">https://www.cdc.gov/coronavirus/2019-ncov/daily-life-coping/outdoor-activities.html</a> (last visited
November 8, 2021).
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Recipients providing assistance to small businesses, nonprofits, or
impacted industries that includes capital expenditures (i.e.,
expenditures on property, facilities, or equipment) should also review
the section Capital Expenditures in General Provisions: Other, which
describes eligibility standards for these expenditures. Recipients
providing assistances in the form of loans should review the section
Treatment of Loans Made with SLFRF Funds in General Provisions: Other.
Recipients should also be aware of the difference between
beneficiaries of assistance and subrecipients when working with small
businesses, nonprofits, or impacted industries. As noted above,
Treasury presumes that the general public, as well as small businesses,
nonprofits, and impacted industries in general, has been impacted by
the COVID-19 disease itself and is eligible for services that mitigate
or prevent COVID-19 spread. As such, a small business, nonprofit, or
impacted industry receiving assistance to implement COVID-19 mitigation
measures is a beneficiary of assistance (e.g., granting funds to a
small business to develop an outdoor patio to reduce transmission). In
contrast, if a recipient contracts with, or grants funds to, a small
business, nonprofit, or impacted industry to carry out an eligible use
for COVID-19 mitigation on behalf of the recipient, the entity is a
subrecipient (e.g., contracting with a small business to operate COVID-
19 vaccination sites). For further information on distinguishing
between beneficiaries and subrecipients, as well as the impacts of the
distinction on reporting and other requirements, see section
Distinguishing Subrecipients versus Beneficiaries.
b. Medical Expenses
Background: The interim final rule also included as an enumerated
eligible use medical expenses, including medical care and services to
address the near-term and potential longer-term impacts of the disease
on individuals infected.
Public Comment: Some commenters sought clarification on the types
of medical expenses eligible and for whom, including whether funds
could be used under this category for expanding health insurance
coverage (e.g., subsidies for premiums, expanding a group health plan),
improvements to healthcare facilities or establishment of new medical
facilities, direct costs of medical services, and costs to a self-
funded health insurance plan (e.g., a county government health plan)
for COVID-19 medical care.
Treasury Response: In the final rule, Treasury is maintaining this
enumerated eligible use category and clarifying that it covers costs
related to medical care provided directly to an individual due to
COVID-19 infection (e.g., treatment) or a potential infection (e.g.,
testing). This can include medical costs to uninsured individuals;
deductibles, co-pays, or other costs not covered by insurance; costs
for uncompensated care at a health provider; emergency medical response
costs; and, for recipients with a self-funded health insurance plan,
excess health insurance costs due to COVID-19 medical care. These are
medical expenses due to COVID-19 and distinguish this category of
eligible uses from other related eligible uses, like COVID-19
mitigation and prevention and health insurance expenses to households,
to provide greater clarity for recipients in determining which category
of eligible uses they should review to assess a potential use of funds.
For discussion of eligibility for programs to expand health insurance
coverage, see section Assistance to Households.
c. Behavioral Health Care
Background: Recognizing that the public health emergency, necessary
mitigation measures like social distancing, and the economic downturn
have exacerbated mental health and substance use challenges for many
Americans, the interim final rule included an enumerated eligible use
for mental health treatment, substance use treatment, and other
behavioral health services, including a non-exhaustive list of specific
services that would be eligible under this category.
Public Comment: Many commenters expressed support for the interim
final rule's recognition of behavioral health impacts of the pandemic
and eligible uses under this category. Several commenters requested
clarification on the types of eligible services under this category,
specifically whether both acute and chronic care are included as well
as services that often do not directly accept insurance payments, like
peer support groups. Some commenters highlighted the importance of
cultural competence in providing effective behavioral health services.
Some commenters suggested that funding should be available broadly and
quickly for this purpose, recommending that funding available for
behavioral health not be tied to the amount of revenue loss experienced
by the recipient.
Treasury Response: In the final rule, Treasury is maintaining this
enumerated eligible use category and clarifying that it covers an
expansive array of services for prevention, treatment, recovery, and
harm reduction for mental health, substance use, and other behavioral
health challenges caused or exacerbated by the public health emergency.
The specific services listed in the interim final rule also remain
eligible.\77\
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\77\ Hotlines or warmlines, crisis intervention, overdose
prevention, infectious disease prevention, and services or outreach
to promote access to physical or behavioral health primary care and
preventative medicine.
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Treasury is further clarifying that when providing behavioral
health services, recipients can identify the impacted population as the
general public and, as with all enumerated eligible uses, presume that
all programs and services are reasonably proportional responses to the
harm identified unless a response is grossly disproportionate to the
type or extent of harm experienced. In contrast, capital expenditures
are not
[[Page 4356]]
considered ``programs and services'' and are not presumed to be
reasonably proportional responses to an identified harm except as
provided in section Capital Expenditures in General Provisions: Other.
In other words, recipients can provide behavioral health services
to members of the general public without any further analysis of
impacts of the pandemic on those individuals and whether the service is
responsive. Recipients may also use this eligible use category to
respond to increased rates of behavioral health challenges at a
population level or, at an individual level, new behavioral health
challenges or exacerbation of pre-existing challenges, including new
barriers to accessing treatment.
Services that respond to these impacts of the public health
emergency may include services across the continuum of care, including
both acute and chronic care, such as prevention, outpatient treatment,
inpatient treatment, crisis care, diversion programs (e.g., from
emergency departments or criminal justice system involvement), outreach
to individuals not yet engaged in treatment, harm reduction, and
supports for long-term recovery (e.g., peer support or recovery
coaching, housing, transportation, employment services).
Recipients may also provide services for special populations, for
example, enhanced services in schools to address increased rates of
behavioral health challenges for youths, mental health first responder
or law enforcement-mental health co-responder programs to divert
individuals experiencing mental illness from the criminal justice
system, or services for pregnant women with substance use disorders or
infants born with neonatal abstinence syndrome. Finally, recipients may
use funds for programs or services to support equitable access to
services and reduce racial, ethnic, or socioeconomic disparities in
access to high-quality treatment.
Eligible uses of funds may include services typically billable to
insurance \78\ or services not typically billable to insurance, such as
peer support groups, costs for residence in supportive housing or
recovery housing, and the 988 National Suicide Prevention Lifeline or
other hotline services. Recipients may also use funds in conjunction
with other federal grants or programs (see section Program
Administration Provisions), though eligible services under SLFRF are
not limited to those eligible under existing federal programs.
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\78\ However, SLFRF funds may not be used to reimburse a service
that was also billed to insurance.
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Given the public health emergency's exacerbation of the ongoing
opioid and overdose crisis, Treasury highlights several ways that funds
may be used to respond to opioid use disorder and prevent overdose
mortality.\79\ Specifically, eligible uses of funds include programs to
expand access to evidence-based treatment like medications to treat
opioid use disorder (e.g., direct costs or incentives for emergency
departments, prisons, jails, and outpatient providers to offer
medications and low-barrier treatment), naloxone distribution, syringe
service programs, outreach to individuals in active use, post-overdose
follow up programs, programs for diversion from the criminal justice
system, and contingency management interventions.
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\79\ In line with the Department of Health and Human Services,
Overdose Prevention Strategy, <a href="https://www.hhs.gov/overdose-prevention/">https://www.hhs.gov/overdose-prevention/</a>, and the Office of National Drug Control Policy,
Administration's Statement on Drug Policy Priorities for Year One
(April 1, 2021), <a href="https://www.whitehouse.gov/wp-content/uploads/2021/03/BidenHarris-Statement-of-Drug-Policy-Priorities-April-1.pdf">https://www.whitehouse.gov/wp-content/uploads/2021/03/BidenHarris-Statement-of-Drug-Policy-Priorities-April-1.pdf</a>.
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Finally, for clarity, Treasury has addressed the eligibility
standard for capital expenditures, or investments in property,
facilities, or equipment, in one section of this Supplementary
Information; see section Capital Expenditures in General Provisions:
Other. Examples of capital expenditures related to behavioral health
that Treasury recognizes as eligible include behavioral health
facilities and equipment (e.g., inpatient or outpatient mental health
or substance use treatment facilities, crisis centers, diversion
centers), as long as they adhere to the standards detailed in the
Capital Expenditures section.
d. Preventing and Responding to Violence
Background: The interim final rule highlighted that some types of
violence had increased during the pandemic and that the ability of
victims to access services had decreased, noting as an example the
challenges that individuals affected by domestic violence face in
accessing services. Accordingly, the interim final rule enumerated as
an eligible use, in disproportionately impacted communities, evidence-
based community violence intervention programs. Following the release
of the interim final rule, Treasury received several recipient
questions regarding whether and how funds may be used to respond to an
increase in crime, violence, or gun violence in some communities during
the pandemic. Treasury released further guidance identifying how
enumerated eligible uses and eligible use categories under the interim
final rule could support violence reduction efforts, including rehiring
public sector staff, behavioral health services, and services to
address negative economic impacts of the pandemic that may aid victims
of crime. The guidance also identified an expanded set of enumerated
eligible uses to address increased gun violence.
Public Comment: Several commenters expressed support for this use
of funds.
Treasury Response: In the final rule, Treasury is maintaining
enumerated eligible uses in this area and clarifying how to apply
eligibility standards. Throughout the final rule, enumerated eligible
uses should respond to an identified impact of the COVID-19 public
health emergency in a reasonably proportional manner to the extent and
type of harm experienced. Many of the enumerated eligible uses--like
behavioral health services, services to improve employment
opportunities, and services to address educational disparities in
disproportionately impacted communities--that respond to the public
health and negative economic impacts of the pandemic may also have
benefits for reducing crime or aiding victims of crime. For example,
the pandemic exacerbated the impact of domestic violence, sexual
assault, and human trafficking; enumerated eligible uses like emergency
housing assistance, cash assistance, or assistance with food,
childcare, and other needs could be used to support survivors of
domestic violence, sexual assault, or human trafficking who experienced
public health or economic impacts due to the pandemic.
Public Comment: Several commenters expressed support for community
violence intervention programs or argued that traditional public safety
approaches had negatively impacted the social determinants of health in
their communities. Several commenters recommended inclusion of
approaches like mental health or substance use diversion programs.
Treasury Response: Treasury recognizes the importance of
comprehensive approaches to challenges like violence. The final rule
includes an enumerated eligible use for community violence intervention
programs in all communities, not just the disproportionately impacted
communities eligible under the interim final rule. Given the increased
rate of violence during the pandemic, Treasury has determined that this
enumerated
[[Page 4357]]
eligible use is responsive to the impacts of the pandemic in all
communities. The final rule incorporates guidance issued after the
interim final rule on specifically types of services eligible,
including:
<bullet> Evidence-based practices like focused deterrence, street
outreach, violence interrupters, and hospital-based violence
intervention models, complete with wraparound services such as
behavioral therapy, trauma recovery, job training, education, housing
and relocation services, and financial assistance; and
<bullet> Capacity-building efforts at community violence
intervention programs like funding more intervention workers,
increasing their pay, providing training and professional development
for intervention workers, and hiring and training workers to administer
the programs.
Public Comment: Some commenters sought further clarification on
whether some of the enumerated eligible uses are considered responsive
to all crime, violent crime, or gun violence.
Treasury Response: Enumerated eligible uses that respond to an
increase in gun violence may be pursued in communities experiencing an
increase in gun violence associated with the pandemic, specifically:
(1) Hiring law enforcement officials--even above pre-pandemic levels--
or paying overtime where the funds are directly focused on advancing
community policing strategies for gun violence, (2) additional
enforcement efforts to reduce gun violence exacerbated by the pandemic,
including prosecuting gun traffickers, dealers, and other parties
contributing to the supply of crime guns, as well as collaborative
federal, state, and local efforts to identify and address gun
trafficking channels, and (3) investing in technology and equipment to
allow law enforcement to more efficiently and effectively respond to
the rise in gun violence resulting from the pandemic, for example
technology to assist in the identification of guns whose serial numbers
have been damaged.
3. Negative Economic Impacts
a. Assistance to Households
Background
While the U.S. economy is now on the path to a strong recovery, the
public health emergency, including the necessary measures taken to
protect public health, resulted in significant economic and financial
hardship for many Americans. As businesses closed, consumers stayed
home, schools shifted to remote education, and travel declined
precipitously, over 22 million jobs were lost in March and April
2020.\80\ One year later, in April 2021, the economy still remained
over 8 million jobs below its pre-pandemic peak,\81\ and the
unemployment rate hovered around 6 percent.\82\
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\80\ U.S. Bureau of Labor Statistics, All Employees, Total
Nonfarm [PAYEMS], retrieved from FRED, Federal Reserve Bank of St.
Louis; <a href="https://fred.stlouisfed.org/series/PAYEMS">https://fred.stlouisfed.org/series/PAYEMS</a> (last visited
December 7, 2021).
\81\ Id.
\82\ U.S. Bureau of Labor Statistics, Unemployment Rate
[UNRATE], retrieved from FRED, Federal Reserve Bank of St. Louis;
<a href="https://fred.stlouisfed.org/series/UNRATE">https://fred.stlouisfed.org/series/UNRATE</a> (last visited December 7,
2021).
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In the months since Treasury issued the interim final rule in May
2021, the economy has made large strides in its recovery. The economy
gained over 4 million jobs in the seven months from May to November
2021; \83\ the unemployment rate fell more than 1.5 percentage points
to 4.2 percent, which is the lowest rate since February 2020; \84\ and
the size of the nation's economy surpassed the pre-pandemic peak in the
second quarter of 2021.\85\
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\83\ U.S. Bureau of Labor Statistics, supra note 80.
\84\ U.S. Bureau of Labor Statistics, supra note 82.
\85\ U.S. Bureau of Economic Analysis, Real Gross Domestic
Product [GDPC1], retrieved from FRED, Federal Reserve Bank of St.
Louis, <a href="https://fred.stlouisfed.org/series/GDPC1">https://fred.stlouisfed.org/series/GDPC1</a> (last visited
December 7, 2021).
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While the economy has made immense progress in its recovery since
May 2021, the economy has also faced setbacks that illustrate the
continued risks to the recovery. As the Delta variant spread across the
country this summer and fall, the United States faced another severe
wave of cases, deaths, and strain on the healthcare system, which
contributed to a slowdown in the pace of recovery in the third
quarter.\86\ Supply chain disruptions have also demonstrated the
difficulties of restarting a global economy.\87\ Moreover, although
many Americans have returned to work as of November 2021, the economy
remains 3.9 million jobs below its pre-pandemic peak,\88\ and 2.4
million workers have dropped out of the labor market altogether
relative to February 2020.\89\ Thus, despite much progress, there is a
continued need to respond to the pandemic's economic effects to ensure
a full, broad-based, and equitable recovery.
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\86\ U.S. Department of the Treasury, Economy Statement by
Catherine Wolfram, Acting Assistant Secretary for Economy Policy,
for the Treasury Borrowing Advisory Committee (November 1, 2021),
available at <a href="https://home.treasury.gov/news/press-releases/jy0453">https://home.treasury.gov/news/press-releases/jy0453</a>.
\87\ Yuka Hayashi, IMF Cuts Global Growth Forecast Amid Supply-
Chain Disruptions, Pandemic Pressures, Wall Street Journal (October
12, 2021), available at <a href="https://www.wsj.com/articles/imf-cuts-global-growth-forecast-amid-supply-chain-disruptions-warns-of-inflation-risks-11634043601">https://www.wsj.com/articles/imf-cuts-global-growth-forecast-amid-supply-chain-disruptions-warns-of-inflation-risks-11634043601</a>.
\88\ U.S. Bureau of Labor Statistics, supra note 80.
\89\ U.S. Bureau of Labor Statistics, Civilian Labor Force Level
[CLF16OV], retrieved from FRED, Federal Reserve Bank of St. Louis,
<a href="https://fred.stlouisfed.org/series/CLF16OV">https://fred.stlouisfed.org/series/CLF16OV</a> (last visited December 7,
2021).
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Indeed, the pandemic's economic impacts continue to affect some
demographic groups more than others. Rates of unemployment remain
particularly severe among workers of color and workers with lower
levels of educational attainment; for example, the overall unemployment
rate in the United States was 4.2 percent in November 2021, but certain
groups saw much higher rates: 6.7 percent for Black workers, 5.2
percent for Hispanic or Latino workers, and 5.7 percent for workers
without a high school diploma.\90\ Job losses have also been
particularly steep among low-wage workers, with these workers remaining
furthest from recovery as of the end of 2020.\91\ A severe recession,
and its concentrated impact among low-income workers, has amplified
food and housing insecurity, with an estimated nearly 20 million adults
living in households where there is sometimes or often not enough food
to eat and an estimated 12 million adults living in households that
were not current on rent.\92\
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\90\ U.S. Bureau of Labor Statistics, Labor Force Statistics
from the Current Population Survey: Employment status of the
civilian population by sex and age (December 6, 2021), <a href="https://www.bls.gov/news.release/empsit.t01.htm">https://www.bls.gov/news.release/empsit.t01.htm</a> (last visited December 7,
2021); U.S. Bureau of Labor Statistics, Labor Force Statistics from
the Current Population Survey: Employment status of the civilian
noninstitutional population by race, Hispanic or Latino ethnicity,
sex, and age (December 6, 2021), <a href="https://www.bls.gov/web/empsit/cpseea04.htm">https://www.bls.gov/web/empsit/cpseea04.htm</a> (last visited December 7, 2021); U.S. Bureau of Labor
Statistics, Labor Force Statistics from the Current Population
Survey: Employment status of the civilian noninstitutional
population 25 years and over by educational attainment (December 6,
2021), <a href="https://www.bls.gov/web/empsit/cpseea05.htm">https://www.bls.gov/web/empsit/cpseea05.htm</a> (last visited
December 7, 2021).
\91\ Elise Gould & Jori Kandra, Wages grew in 2020 because the
bottom fell out of the low-wage labor market, Economic Policy
Institute (Feb. 24, 2021), <a href="https://files.epi.org/pdf/219418.pdf">https://files.epi.org/pdf/219418.pdf</a>. See
also, Michael Dalton et al., The K-Shaped Recovery: Examining the
Diverging Fortunes of Workers in the Recovery from the COVID-19
Pandemic using Business and Household Survey Microdata, U.S. Bureau
of Labor Statistics Working Paper Series (July 2021), <a href="https://www.bls.gov/osmr/research-papers/2021/pdf/ec210020.pdf">https://www.bls.gov/osmr/research-papers/2021/pdf/ec210020.pdf</a>.
\92\ Center on Budget and Policy Priorities, Tracking the COVID-
19 Recession's Effects on Food, Housing, and Employment Hardships,
<a href="https://www.cbpp.org/research/poverty-and-inequality/tracking-the-covid-19-economys-effects-on-food-housing-and">https://www.cbpp.org/research/poverty-and-inequality/tracking-the-covid-19-economys-effects-on-food-housing-and</a> (last visited December
17, 2021).
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While economic effects have been seen across many communities,
there are additional disparities by race and income. For example,
approximately
[[Page 4358]]
half of low-income, Black, and Hispanic parents reported difficulty
covering costs related to food, housing, utility, or medical care.\93\
Over the course of the pandemic, inequities also manifested along
gender lines, as schools closed to in-person activities, leaving many
working families without childcare during the day.\94\ Women of color
have been hit especially hard: The labor force participation rate for
Black women has fallen by 3.6 percentage points \95\ during the
pandemic as compared to 1.3 percentage points for Black men \96\ and
1.7 percentage points for White women.\97\
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\93\ Michael Karpman, Dulce Gonzalez, Genevieve M. Kenney,
Parents Are Struggling to Provide for Their Families during the
Pandemic, Urban Institute (May 2020), <a href="https://www.urban.org/research/publication/parents-are-struggling-provide-their-families-during-pandemic?utm_source=urban_researcher&utm_medium=email&utm_campaign=covid_parents&utm_term=lhp">https://www.urban.org/research/publication/parents-are-struggling-provide-their-families-during-pandemic?utm_source=urban_researcher&utm_medium=email&utm_campaign=covid_parents&utm_term=lhp</a>.
\94\ Women have carried a larger share of childcare
responsibilities than men during the COVID-19 crisis. See, e.g.,
Gema Zamarro & Mar[iacute]a J. Prados, Gender differences in
couples' division of childcare, work and mental health during COVID-
19, Rev. Econ. Household 19:11-40 (2021), available at <a href="https://link.springer.com/article/10.1007/s11150-020-09534-7">https://link.springer.com/article/10.1007/s11150-020-09534-7</a>; Titan Alon et
al., The Impact of COVID-19 on Gender Equality, National Bureau of
Economic Research Working Paper 26947 (April 2020), available at
<a href="https://www.nber.org/papers/w26947">https://www.nber.org/papers/w26947</a>.
\95\ U.S. Bureau of Labor Statistics, Labor Force Participation
Rate--20 Yrs. & Over, Black or African American Women [LNS11300032],
retrieved from FRED, Federal Reserve Bank of St. Louis; <a href="https://fred.stlouisfed.org/series/LNS11300032">https://fred.stlouisfed.org/series/LNS11300032</a> (last visited December 7,
2021).
\96\ U.S. Bureau of Labor Statistics, Labor Force Participation
Rate--20 Yrs. & Over, Black or African American Men [LNS11300031],
retrieved from FRED, Federal Reserve Bank of St. Louis; <a href="https://fred.stlouisfed.org/series/LNS11300031">https://fred.stlouisfed.org/series/LNS11300031</a> (last visited December 7,
2021).
\97\ U.S. Bureau of Labor Statistics, Labor Force Participation
Rate--20 Yrs. & Over, White Women [LNS11300029], retrieved from
FRED, Federal Reserve Bank of St. Louis; <a href="https://fred.stlouisfed.org/series/LNS11300029">https://fred.stlouisfed.org/series/LNS11300029</a> (last visited December 7,
2021).
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As the economy recovers, the effects of the pandemic-related
recession may continue to impact households, including a risk of
longer-term effects on earnings and economic potential. For example,
unemployed workers, especially those who have experienced longer
periods of unemployment, earn lower wages over the long term once
rehired.\98\ In addition to the labor market consequences for
unemployed workers, recessions can also cause longer-term economic
challenges through, among other factors, damaged consumer credit scores
\99\ and reduced familial and childhood wellbeing.\100\ These potential
long-term economic consequences underscore the continued need for
robust policy support.
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\98\ See, e.g., Michael Greenstone & Adam Looney, Unemployment
and Earnings Losses: A Look at Long-Term Impacts of the Great
Recession on American Workers, Brookings Institution (Nov. 4, 2011),
<a href="https://www.brookings.edu/blog/jobs/2011/11/04/unemployment-and-earnings-losses-a-look-at-long-term-impacts-of-the-great-recession-on-american-workers/">https://www.brookings.edu/blog/jobs/2011/11/04/unemployment-and-earnings-losses-a-look-at-long-term-impacts-of-the-great-recession-on-american-workers/</a>.
\99\ Chi Chi Wu, Solving the Credit Conundrum: Helping
Consumers' Credit Records Impaired by the Foreclosure Crisis and
Great Recession, National Consumer Law Center (Dec. 2013), <a href="https://www.nclc.org/images/pdf/credit_reports/report-credit-conundrum-2013.pdf">https://www.nclc.org/images/pdf/credit_reports/report-credit-conundrum-2013.pdf</a>.
\100\ Irwin Garfinkel, Sara McLanahan, Christopher Wimer, eds.,
Children of the Great Recession, Russell Sage Foundation (Aug.
2016), available at <a href="https://www.russellsage.org/publications/children-great-recession">https://www.russellsage.org/publications/children-great-recession</a>.
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Low- and moderate-income households, those with income levels at or
below 300 percent of the federal poverty level (FPL), face particular
hardships and challenges. These households report much higher rates of
food insecurity and housing hardships than households with higher
incomes. For example, households with incomes at or below 300 percent
FPL are several times more likely to have reported struggling with food
insecurity compared to households with income above 300 percent
FPL.\101\ Similarly, low- and moderate-income households reported being
housing insecure \102\ at rates more than twice as high as higher-
income households, and low- and moderate-income households reported
housing quality hardship \103\ at rates statistically significantly
greater than the rate for higher-income households.\104\ The economic
crisis caused by the pandemic worsened economic outcomes for workers in
many low- and moderate-income households. Industries that employed low-
wage workers experienced a disproportionate level of job loss. For
example, from February 2020 to February 2021, the hospitality and
leisure industry lost nearly 3.5 million jobs.\105\ While the entire
industry was impacted, 72 percent of the job losses occurred in the
lowest wage service occupations compared to only a 6 percent rate of
job loss in the highest wage management and finance jobs.\106\ Similar
trends exist in other heavily impacted industries. In public education,
the lowest wage occupations, service and transportation jobs, saw a job
loss rate of 20 and 26 percent, respectively.\107\ During that same
time period, the highest wage occupations in public education,
management, actually saw jobs increase by 7 percent.\108\
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\101\ Kyle J. Casewell and Stephen Zuckerman, Food Insecurity,
Housing Hardship, and Medical Care Utilization, Urban Institute
(June 2018), available at <a href="https://www.urban.org/sites/default/files/publication/98701/2001896_foodinsecurity_housinghardship_medicalcareutilization_finalized.pdf">https://www.urban.org/sites/default/files/publication/98701/2001896_foodinsecurity_housinghardship_medicalcareutilization_finalized.pdf</a>.
\102\ Housing insecurity is defined as not paying the full
amount of rent or mortgage and/or utility bills (gas, oil, or
electricity) sometime in the previous 12 months.
\103\ Housing quality hardship is defined as an affirmative
response to one or more questions related to problems with a
respondent's physical dwelling: Pests and/or insects; leaking roof
or ceiling; windows that are broken or cannot shut; exposed
electrical wires; broken plumbing (toilet, hot water, other); holes
in walls, ceiling, or floor; no appliances (refrigerator or stove);
and no phone (of any kind).
\104\ Id.
\105\ Elise Gould and Melat Kassa. Low-wage, low-hours workers
were hit hardest in the COVID-19 recession: The State of Working
America 2020 employment report, Economic Policy Institute (May
2021), available at <a href="https://www.epi.org/publication/swa-2020-employment-report/">https://www.epi.org/publication/swa-2020-employment-report/</a>.
\106\ Id.
\107\ Id.
\108\ Id.
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While many households suffered negative economic outcomes as a
result of the COVID-19 pandemic and economic recession, households with
low incomes were impacted in disproportionate and exceptional ways.
From January 2020 to March 2021, low-wage workers experienced job loss
at a rate five times higher than middle-wage workers, and high-wage
workers actually experienced an increase in job opportunities.\109\
Because workers in low-income households were more likely to lose their
job or experience reductions in pay, those same households were also
more likely to experience economic hardships like trouble paying
utility bills, affording rent or mortgage payments, purchasing food,
and paying for medical expenses.\110\ The disproportionate negative
impacts the pandemic has had on low-income families extend beyond
financial insecurity. For example, low-income families have reported
higher levels of social isolation, stress, and other negative mental
health outcomes during the pandemic. While over half of all U.S. adults
report that their mental health was negatively affected by the
pandemic, adults with low incomes reported major negative mental health
impacts at a rate nearly twice that of adults with high incomes.\111\
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\109\ R. Chetty, J. Friedman, N. Hendren, M. Stepner, & Team, T.
O. I., The Economic Impacts of COVID-19: Evidence from a New Public
Database Built Using Private Sector Data (No. w27431; p. w27431)
(2020), National Bureau of Economic Research. <a href="https://doi.org/10.3386/w27431">https://doi.org/10.3386/w27431</a>.
\110\ M. Despard, Michal Grinstein-Weiss, Yung Chun, and Stephen
Roll, COVID-19 job and income loss leading to more hunger and
financial hardship, Brookings Institute (July 13, 2020), <a href="https://www.brookings.edu/blog/upfront/2020/07/13/covid-19-job-and-income-loss-leading-to-more-hunger-and-financial-hardship/">https://www.brookings.edu/blog/upfront/2020/07/13/covid-19-job-and-income-loss-leading-to-more-hunger-and-financial-hardship/</a>.
\111\ N. Panchal, R. Kamal, C. Mu[ntilde]ana, & P. Chidambaram,
The Implications of COVID-19 for Mental Health and Substance Use,
Kaiser Family Foundation (February 10, 2021), <a href="https://www.kff.org/coronavirus-covid-19/issue-brief/the-implications-of-covid-19-for-mental-health-and-substance-use/">https://www.kff.org/coronavirus-covid-19/issue-brief/the-implications-of-covid-19-for-mental-health-and-substance-use/</a>.
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[[Page 4359]]
Summary of Interim Final Rule and Final Rule Structure
Summary: The interim final rule provided a non-exhaustive list of
enumerated eligible uses to respond to the negative economic impacts of
the pandemic through assistance to households, as well as a standard
for assessing whether uses of funds beyond those enumerated are
eligible.
The interim final rule described enumerated eligible uses for
assistance to households in several categories: (1) Assistance to
unemployed workers, (2) state Unemployment Insurance Trust Funds, (3)
assistance to households, and (4) expenses to improve the efficacy of
economic relief. Note that the interim final rule posed several
questions to the public on enumerated eligible uses for assistance to
households; comments on these questions are addressed in the relevant
subject matter section below.
In addition, in recognition that pre-existing health, economic, and
social disparities contributed to disproportionate pandemic impacts in
certain communities, the interim final rule also provided a broader
list of enumerated eligible uses to respond to the pandemic in
disproportionately impacted communities, specifically: (1) Building
stronger communities through investments in housing and neighborhoods,
(2) addressing educational disparities, and (3) promoting healthy
childhood environments. In the interim final rule, under the Public
Health section, recipients could also provide services to address
health disparities and increase access to health and social services;
these eligible uses have been re-organized into the Assistance to
Households section to consolidate responses in disproportionately
impacted communities and enhance clarity.
This section addresses enumerated eligible uses in the final rule
to respond to negative economic impacts to households. As a reminder,
recipients may presume that a household or population that experienced
unemployment, experienced increased food or housing insecurity, or is
low or moderate income experienced negative economic impacts resulting
from the pandemic, and recipients may provide services to them that
respond to these impacts, including these enumerated eligible uses.
For guidance on how to determine whether a particular use, beyond
those enumerated, is eligible; further detail on which households and
communities are presumed eligible for services; and how to identify
eligible households and communities beyond those presumed eligible, see
section General Provisions: Structure and Standards.
Reorganizations and Cross-References: The final rule reorganizes
all enumerated eligible uses for impacted and disproportionately
impacted households into the section Assistance to Households, with the
exception that expenses to improve the efficacy of economic relief has
been re-categorized into a different section of the final rule for
increased clarity; for discussion of that use category, see section
General Provisions: Other.
Note that in conducting this reorganization, and based on further
analysis and in response to comments, Treasury has determined that
several enumerated uses included in the interim final rule for
disproportionately impacted communities are directly responsive to
negative economic impacts experienced by impacted households. In the
final rule, these uses have been moved from ``disproportionately
impacted'' to ``impacted'' households accordingly, making these
services available to both disproportionately impacted and impacted
households. These uses include assistance applying for public benefits
or services; programs or services that address or mitigate the impacts
of the COVID-19 public health emergency on childhood health or welfare,
including childcare, early learning services, programs to provide home
visits, and services for families involved in the child welfare system
and foster youth; programs to address the impacts of lost instructional
time for students; \112\ and programs or services that address housing
insecurity, lack of affordable housing, or homelessness.
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\112\ For which recipients may presume that any student who did
not have access to in-person instruction for a significant period of
time was impacted by the pandemic.
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The following activities remain enumerated eligible uses for
disproportionately impacted households: Remediation of lead paint or
other lead hazards; housing vouchers and assistance relocating to
neighborhoods with higher levels of economic opportunity; and programs
or services that address educational disparities, including assistance
to high-poverty school districts to advance equitable funding across
districts and geographies and evidence-based services to address the
academic, social, emotional, and mental health needs of students.
Enumerated Eligible Uses for Impacted Households
The interim final rule included several enumerated eligible uses to
provide assistance to households or populations facing negative
economic impacts due to COVID-19. Enumerated eligible uses included:
Food assistance; rent, mortgage, or utility assistance; counseling and
legal aid to prevent eviction or homelessness; emergency assistance for
burials, home repairs, weatherization, or other needs; internet access
or digital literacy assistance; cash assistance; or job training to
address negative economic or public health impacts experienced due to a
worker's occupation or level of training. It also posed a question as
to what other types of services or costs Treasury should consider as
eligible uses to respond to the negative economic impacts of COVID-19.
This section addresses each of these enumerated eligible uses in
turn, with the exception of job training, which has been re-categorized
for increased clarity to the eligible use for ``assistance to
unemployed and underemployed workers.'' In general, commenters
supported inclusion of these enumerated eligible uses to address key
economic needs among households due to the pandemic, and Treasury is
maintaining these eligible uses in the final rule, in line with
commenters' recommendations.
1. Food assistance. The interim final rule included an enumerated
eligible use for food assistance. Some commenters expressed support for
this eligible use and emphasized the importance of aid to address food
insecurity. Some commenters raised questions as to whether food
assistance funds could be used to augment services provided through
organizations like food banks, churches, and other food delivery
services, or generally be sub-awarded to these organizations.
Treasury Response: Treasury is maintaining this enumerated eligible
use without change. Recipients may, as was the case under the interim
final rule, administer programs through a wide range of entities,
including nonprofit and for-profit entities, to carry out eligible uses
on behalf of the recipient government (see section Distinguishing
Subrecipients versus Beneficiaries). Further, Treasury is clarifying
that capital expenditures related to food banks and other facilities
primarily dedicated to addressing food insecurity are eligible;
recipients seeking to use funds for capital expenditures should refer
to the section Capital Expenditures in General
[[Page 4360]]
Provisions: Other for additional eligibility standards that apply to
uses of funds for capital expenditures.
2. Emergency housing assistance. The interim final rule included an
enumerated eligible use for rent, mortgage, or utility assistance and
counseling and legal aid to prevent eviction or homelessness.
Public Comment: Several commenters supported the inclusion of
eviction prevention activities as an eligible use given the high number
of households behind on rent and potentially at risk of eviction.
Following release of the interim final rule, Treasury had also received
requests for elaboration on the types of eligible services in this
category. Some commenters also recommended including assistance to
households for delinquent property taxes, for example to prevent tax
foreclosures on homes, as an enumerated eligible use.
Treasury Response: In response to requests for elaboration on the
types of eligible services for eviction prevention, Treasury has
provided further guidance that these services include ``housing
stability services that enable eligible households to maintain or
obtain housing, such as housing counseling, fair housing counseling,
case management related to housing stability, outreach to households at
risk of eviction or promotion of housing support programs, housing
related services for survivors of domestic abuse or human trafficking,
and specialized services for individuals with disabilities or seniors
that support their ability to access or maintain housing,'' as well as
``legal aid such as legal services or attorney's fees related to
eviction proceedings and maintaining housing stability, court-based
eviction prevention or eviction diversion programs, and other legal
services that help households maintain or obtain housing.'' \113\
Treasury also emphasized that recipients may work with court systems,
nonprofits, and a wide range of other organizations to implement
strategies to support housing stability and prevent evictions.
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\113\ See FAQ 2.21. Coronavirus State and Local Fiscal Recovery
Funds, Frequently Asked Questions, as of July 19, 2021; <a href="https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf">https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf</a>.
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In the final rule, Treasury is maintaining these enumerated
eligible uses, including those described in the interim final rule and
later guidance, in line with commenters' recommendations. To enhance
clarity, Treasury is also elaborating on some types of services
included under this eligible use category; this remains a non-
exhaustive list of eligible services. For example, eligible services
under this use category include: Rent, rental arrears, utility costs or
arrears (e.g., electricity, gas, water and sewer, trash removal, and
energy costs, such as fuel oil), reasonable accrued late fees (if not
included in rental or utility arrears), mortgage payment assistance,
financial assistance to allow a homeowner to reinstate a mortgage or to
pay other housing-related costs related to a period of forbearance,
delinquency, or default, mortgage principal reduction, facilitating
mortgage interest rate reductions, counseling to prevent foreclosure or
displacement, relocation expenses following eviction or foreclosure
(e.g., rental security deposits, application or screening fees).
Treasury is clarifying that assistance to households for delinquent
property taxes, for example to prevent tax foreclosures on homes, was
permissible under the interim final rule and continues to be so under
the final rule. In addition, Treasury is also clarifying that
recipients may administer utility assistance or address arrears on
behalf of households through direct or bulk payments to utility
providers to facilitate utility assistance to multiple consumers at
once, so long as the payments offset customer balances and therefore
provide assistance to households.
This eligible use category also includes emergency assistance for
individuals experiencing homelessness, either individual-level
assistance (e.g., rapid rehousing services) or assistance for groups of
individuals (e.g., master leases of hotels, motels, or similar
facilities to expand available shelter).
Further, Treasury is clarifying that transitional shelters (e.g.,
temporary residences for people experiencing homelessness) are eligible
capital expenditures. Recipients seeking to use funds for capital
expenditures should refer to the section Capital Expenditures in
General Provisions: Other for additional eligibility standards that
apply to uses of funds for capital expenditures.
Note that this enumerated eligible use describes ``emergency
housing assistance,'' or assistance for responses to the immediate or
near-term negative economic impacts of the pandemic. The final rule
also clarifies and expands the ability of recipients to use SLFRF funds
to address the general lack of affordable housing and housing
challenges underscored by the pandemic. For discussion of affordable
housing eligible uses, including services that primarily increase
access to affordable, high-quality housing and support stable housing
and homeownership over the long term, see the eligible use for
``promoting long-term housing security: Affordable housing and
homelessness.''
3. Emergency assistance for pressing needs: Burials, home repairs,
weatherization, or other needs. The interim final rule included an
enumerated eligible use for emergency assistance for burials, home
repairs, weatherization, and other needs; these types of programs may
provide emergency assistance for pressing and unavoidable household
needs. Treasury did not receive comments on this eligible use and is
maintaining it in the final rule.
Background on Home Repairs and Weatherization: The economic
downturn has meant fewer households had the resources needed to make
necessary home repairs and improvements. In May 2021, 28 percent of
landlords reported deferring maintenance and 27 percent of tenants
reported maintenance requests going unanswered.\114\ While small and
cosmetic repairs can often wait, deferring major repairs, such as
plumbing needs, can result in unsafe and unhealthy living environments
and, eventually, the need for more expensive repairs and fixes.
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\114\ Jung Hyun Choi, Laurie Goodman, and Daniel Pang, The
Pandemic Is Making It Difficult for Mom-and-Pop Landlords to
Maintain Their Properties, Urban Institute (July 23, 2021), <a href="https://www.urban.org/urban-wire/pandemic-making-it-difficult-mom-and-pop-landlords-maintain-their-properties">https://www.urban.org/urban-wire/pandemic-making-it-difficult-mom-and-pop-landlords-maintain-their-properties</a>.
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In addition to repairs, many homes are in need of weatherization.
Weatherization assistance helps low- and moderate-income Americans save
energy, reduce their utility bills, and keeps them and their homes
safe. One in three households is energy insecure,\115\ meaning they do
not have the ability to meet their energy needs.\116\ Weatherization
efforts are particularly important for low- and moderate-income
households. Households of color, renters, and households with low or
moderate incomes are all more likely to report energy insecurity.\117\
These
[[Page 4361]]
disparities are partially a result of economic hardship but are also
caused by inequitable access to housing with proper insulation, up to
date heating, cooling, and ventilation systems, and functioning and up
to date lighting and appliances.\118\ While programs that address the
effects of energy hardships, like the Low-Income Home Energy Assistance
Program (LIHEAP), are critical, weatherization attempts to address root
causes by addressing issues that lead to energy insecurities.
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\115\ U.S. Energy Information Administration, Residential Energy
Consumption Survey (2017), Retrieved from <a href="https://www.eia.gov/consumption/residential/data/2015/hc/php/hc11.1.php">https://www.eia.gov/consumption/residential/data/2015/hc/php/hc11.1.php</a>.
D. Hern[aacute]ndez, Understanding `energy insecurity' and why
it matters to health, Social Science & Medicine, 167, 1-10 (2016),
<a href="https://doi.org/10.1016/j.socscimed.2016.08.029">https://doi.org/10.1016/j.socscimed.2016.08.029</a>.
\116\ Hern[aacute]ndez, D. (2016). Understanding `energy
insecurity' and why it matters to health. Social Science & Medicine,
167, 1-10. <a href="https://doi.org/10.1016/j.socscimed.2016.08.029">https://doi.org/10.1016/j.socscimed.2016.08.029</a>.
\117\ U.S. Energy Information Administration, Residential Energy
Consumption Survey (RECS) <a href="https://www.eia.gov/consumption/residential/data/2015/hc/php/hc11.1.php">https://www.eia.gov/consumption/residential/data/2015/hc/php/hc11.1.php</a>. (last visited November 9,
2021)
\118\ A. Drehobl, & L. Ross, Lifting the high energy burden in
America's largest cities: How energy efficiency can improve low
income and underserved communities, American Council for an Energy
Efficient Economy (2016), <a href="https://www.aceee.org/sites/default/files/publications/researchreports/u1602.pdf">https://www.aceee.org/sites/default/files/publications/researchreports/u1602.pdf</a>.
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4. Internet access or digital literacy assistance. The interim
final rule included an enumerated eligible use for assistance to
households for internet access or digital literacy assistance. This
enumerated eligible use, which responds to the negative economic
impacts of the pandemic on a household by providing assistance that
helps them secure internet access or increase their ability to use
computers and the internet, is separate from the eligible use category
for investments in broadband infrastructure, under Sections
602(c)(1)(D) and 603(c)(1)(D), which is used to build new broadband
networks through infrastructure construction or modernization. For
discussion of broadband infrastructure investment in the final rule,
see section Broadband Infrastructure in Infrastructure.
Background: The COVID-19 public health emergency has underscored
the importance of universally available, high-speed, reliable, and
affordable broadband coverage as millions of Americans rely on the
internet to participate in, among other critical activities, school,
healthcare, and work. Recognizing the need for such connectivity, SLFRF
funds can be used to make necessary investments in broadband
infrastructure that increase access over the long term, as well as the
necessary supports to purchase internet access or gain digital literacy
skills needed to complete activities of daily living during the
pandemic.
The National Telecommunications and Information Administration
(NTIA)
[…truncated; see source link]Indexed from Federal Register on January 27, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.